Jackson, Andrew, Ben Dyson, and Herman E. Daly. 2012. Modernising Money: Why our Monetary System is Broken and how it can be Fixed. London: Positive Money.
Reviewed by Steven Walsh, AMI Researcher
Andrew Jackson and Ben Dyson have done a fantastic job in helping to explain modern banking practices as they relate specifically to the money creation process and, just as importantly, how we must reform it, creating a fair monetary system for all. This system would allow for public and private job creation, and along with that opportunity, a more peaceful and healthy society and environment. While the book focuses on England’s monetary system, the same analysis applies to the United States and, in general, all the banking systems in the world.
In the United States parallel work, with a strong historical foundation, has been done by the American Monetary Institute. The National Employment Emergency Defense Act (NEED) has been introduced recently into two sessions of Congress by the Congressman, Dennis Kucinich. This Act throws a spear into the mysterious – and often cloaked – banking system and corrects a fundamental injustice in how money comes into circulation. Dyson and Jackson add to the monetary reform movement by exposing the present monetary system in an understandable fashion and by articulating possibilities for how the future might look under the “reformed system.”
The compelling and key argument that Dyson and Jackson make is that the present practice, whereby money is created by banks (indeed, 97% of the money in England), perpetuates an injustice and is immoral! The origination of money must belong to government, through a public administration process, for the benefit of all citizens. It is that simple. Jackson and Dyson use the current language of economics and banking to explain the “moral hazard” of letting banking corporations and their leadership control the nation’s money supply. A major demonstration of the moral hazard has been the recent bail out of the failing banks. When bankers mismanage, no matter what their size, and become insolvent there needs to be a proper way to let them fail without hurting the overall monetary system of society. The “reformed system” as advocated in Modernising Money, like the NEED Act in the United States, makes this transition in an elegant and just way.
In the light of history Dyson and Jackson’s book comes at an important time. During the Great Depression of the 1930’s, important U.S. economic academics: Irving Fisher, Henry Simons, etc., along with a strong majority of the economists of the day agreeing, introduced bills into both chambers of Congress to reform the banking system, in the same fundamental way as it is being done today: because it was morally right. They felt that even though the bankers would not want it that enough righteous Congressmen would take the time to understand and the change would come. They did not push to educate the common voters; the bankers prevailed and both bills died in Congressional committees. Today we understand this was a mistake and Jackson and Dyson’s book plays an important role in rectifying this by helping to educate the public on this crucial topic. The educated lay person will now be in a better position to stand up to monetary/economic punditry or present-day banking advocate and speak truth to power.
Jackson and Dyson give the reader explicit detail in how to move from the current operating system to the public creation and administration of money (through the Money Creation Committee and the Bank of England in England, which parallels the Monetary Control Board and the Bureau of the Federal Reserve as created and maintained under the NEED Act). This allows for common sense choices that can take a nation out of debt and have its people prosper at the same time. It is through these real choices: how much money should be created, should this money be spent into circulation or should it be lent to the banks to be relent into circulation, that Dyson and Jackson explain how money should be modernized. For example, if money is lent to the banks should there be a stipulation that this new money be lent out by the banks for entrepreneurial activities rather than creating asset bubbles in the area of home mortgages(?).
For those readers with little time, I would suggest reading the five page conclusion which serves as a summary for this important book. Overall, the language is clear and although the economic/banking material at times gets a little thick, know that you do not have to read every point before moving on. The book is organized and smartly redundant enough, that the chapters can stand on their own. Also, as suggested by the authors, you can choose to skip chapter four, which slogs through the mud of our present banking/economic system, and not miss crucial information for understanding monetary reform. Chapter four, however, goes the extra mile in laying out the present system bare, which more serious students will find useful.
In summary, Modernising Money is a must read for those who want to help lead us out of this economic/monetary abyss. It is time for enough people to understand these monetary reform ideas so that we have the political resolve to right society for all.