Draft of The Bromsgrove Group

DECLARATION
on
Binary Credit
(Social Credit and Binary Economics)
being
A Revolution In Economics

We recognise:

The need for unity

There is a need for unity. While of course pursuing their own objectives, groups should also consider promoting the comprehensive framework of Binary Credit. By so doing, they will bring about the circumstances in which their own objectives are more likely to be achieved. In particular, groups should note that, while the protesters at Seattle, Washington, Prague etc. have admirably expressed what we are Against, it is now time to set out what we are For.

The main issue

The supply of money into the economy, and for what purpose, is the main issue which governs all the issues.
Most people do not realise that the present system is debt-based with 96% of all money being supplied to the economy as a debt to be repaid, with interest, to the banking system.

The Great Unmentionable Secret
Banks create money out of nothing!

Furthermore, when a bank lends, it is not lending other people's savings (already deposited in the bank). Rather the bank is creating a sum to lend by just pressing a computer button, i.e., the bank creates money out of nothing and then adds interest! This is the Great Unmentionable Secret that the banks are hiding. Also being hidden is the fact that governments rely upon the majority of people borrowing all the time (and so going into debt) simply to create enough money to supply the economy.
To cap it all, governments, too, borrow from the banking system to fund public expenditure. Taxpayers then have to pay back the principal debt plus interest.

96% of the money supply is debt-based and has to pay interest!

So 96% of the present money supply (for the needs of individuals, the private sector and government) is debt-based and has to pay interest!! Indeed, most activity in a modern economy requires interest to be paid to the banking system.
Because of this debt-based economy, the indebtedness of individuals, families, businesses, cities, governments and countries grows daily.
Exacerbated by IMF and World Bank policy, the world is now in a wholesale debt slavery. That slavery, by eternally requiring repayment of principal plus interest (and compound interest), needlessly perpetuates poverty and is ultimately destructive of society, the environment and the planet. The huge amount of debt world-wide makes for a situation of gross instability and the possibility of a major economic crash. In addition, at present, there are no viable solutions to problems such as diminishing tax bases and financial provision for ageing, longer-living populations.

Obfuscation and greed

The present debt-based system is the result of intellectual obfuscation, historical practice, and greed. Why should the banking business be given a huge advantage - the power to create money for its own profit - which is denied to all other businesses?

Government can create all the money

Yet the present debt-based system can be changed if people wake up to the crucial fact that the banks create money out of nothing and government can do the same. Government has an inherent power to create money out of nothing, with or without interest, as it chooses.
Indeed, government can, and should, create all the money.

Plenty of money potentially available

It is therefore a complete lie to claim that there is no money to fund
vital public services, private industries, home ownership and social and environmental projects, when money, at source, is created out of nothing.
Moreover, since money is being created out of nothing, it is also a complete lie to claim (as conventional economics does claim) that financial savings are needed before there can be investment. The truth is that there is plenty of money potentially available if it is created and used for essential purposes (which include wide capital ownership) and without causing inflation. (And, NB, the major cause of inflation is the interest which, all the time, has to be paid to the banking system.)
So governments should be able to supply money, debt-free, without having to borrow from the banking system. "Debt-free" means that it is interest-free and does not have to be repaid.
However, for the purposes of widely extending the ownership of productive capital and the ownership of homes, the money need only be interest-free and, being repaid, cannot be inflationary. The money would come through a private bank but because that bank would in effect be acting as a mere conduit for interest-free money coming from the government, no interest would be payable.
The money would, however, still have some charges attached to it, namely,
i) administration costs
ii) insurance against loss (or equivalent), perhaps totalling 3% or a little more.
Private banks will still be able to make, and charge interest on, loans for capital investment which do not result in wider capital ownership.
With debt-free and interest-free money we can create new societies, build a new world and better carry out our duties to God. Islamic countries, among others, will be pleased to notice in particular that no interest is involved.

We further recognise:

The unfree market prevents the wide ownership of productive capital

In practice, 'free market' capitalism (which should be called 'unfree, unfair and inefficient market capitalism') only allows jobs and welfare benefit for most people and does not allow them the ownership of substantial amounts of productive capital.

An independent basic income for all

So, since many people (e.g., unpaid carers) cannot labour and jobs are not always available, or are insecure, or badly paid, every individual should also have an independent basic income. An element of that income could come from the redistribution of taxes but, in the main, the income should come
- from the issuance of debt-free money (being termed 'National Dividend' or 'pre-distribution' income) and/or
- using interest-free money, from the ownership of productive capital (being termed 'capital income').
Indeed, since productive capital now creates most of the wealth, all people, if they are to be truly economically productive, must have some ownership of capital.

Anti-inflation

The present system, being debt-based and eternally demanding the payment of ever-increasing amounts of interest, is inflationary. In order to curb inflation and promote stable money, a democratically accountable body should be established to regulate the supply of money by
a) deciding the amount of debt-free money to be issued; and
b) deciding interest rates in the conventional banking sector.
Broadly, when the amount of debt-free money begins to exceed a certain amount, interest rates and other mechanisms in the conventional banking sector would be used to control the overall money supply.
However, no regulation would be necessary where interest-free money (for wide capital ownership, home ownership and public capital spending) is used because it is repayable (and so cancellable). Indeed, the use of interest-free money for wide capital ownership hugely increases productive capacity while all the money used for the financing is eventually cancelled. The monetary result is the opposite of inflation. A new word is required to describe lowered prices plus prosperity - perhaps 'doeflation'.

We affirm:

- Money must be based on the real wealth of society - people, skills, materials and productive capital - not on debt.
- The supply of money must relate to the physical facts - not to the requirements of the banking system.
- Money is the means of exchange for goods and services. It is not a commodity in itself.
- The purpose of an economic system is to provide goods and services - as, when and where required - in order to satisfy human needs.
- Money must be our servant - not our master.
- Money, at source, is created out of nothing, so there is no need for it to be scarce.
- Whatever is physically possible and socially desirable can be made financially possible.
- The money system must maximise personal responsibility.
- The present economic system can, and will be, changed for the better.

Consequently
We propose:

That the government - via a democratically accountable authority - undertakes the supply of money into circulation as follows:

Debt-free
- To provide a basic income (including pensions, etc.) for every individual.

Interest-free
- To provide a basic income (including pensions, etc.) for every individual through private capital investment by ensuring that each person has a substantial ownership of productive capital and receives the full income there from. This makes producers and consumers the same people as well as balancing supply and demand.
- To fund start-up and small business.
- To achieve home ownership (at one half or one third of the present cost).

Debt-free or interest-free
- To fund public capital investment.
- To end National Debt and Third World debt. (A condition of ending Third World debt should be that measures are taken to ensure wide capital ownership.)

The government would supply money into circulation as set out above
while, at the same time, regulating interest rates and using other mechanisms in the conventional banking sector.
Among other things, this will reduce the overall burden of debt, end reliance upon the banking system for money supply, make all individuals economically productive via capital ownership, allow everyone to own their homes (without having to pay two/three times the original cost as happens at present), and open potential for limitless change.
However, interest-free money for private capital investment should be allowed only if, at the same time (and on the market principles of binary economics) it creates new owners of capital. Those principles include a requirement that every individual in the population should have substantial ownership of productive capital and the full income there from, whether or not they are able to labour.
Furthermore, in order to spread capital ownership more widely throughout the population, all estates at death should suffer no Estate or Inheritance Tax if, as a result of a gift, a recipient does not acquire an excessively large holding. In other words, wealthy persons may leave their estates, tax-free, to whomsoever they wish subject to one condition - that recipients do not acquire a capital estate larger than some legislatively defined amount.
In addition, LETS-type schemes should be encouraged so that, should they wish, people may simply barter their time and/or labour.

Implementation of the Grand Unifying Theory will create:

Healthy economies and societies in which:

- All individuals attain a sturdy independence becoming economically productive to the extent necessary to satisfy their reasonable needs.
- There is balanced growth which is also a green growth because
a) individuals involved in practices destructive of the environment can be given another way to earn, and
b) the economic efficiency allows for the introduction of more costly, but greener, processes.
- The economic (and hence social) status of women will be enhanced.
- There is a solution to poverty.
- There is a foundation for the ending of National and Third World debt and the stimulation of economies and societies no longer in hock to outsiders.
- Democracy will be deepened because all individuals will have much greater control over their daily lives.
- There is an economic foundation for the voluntary control of population levels.
- Everywhere exists a practical basis for a new honesty, optimism and generosity of spirit.

'Free market' supporters will note that:

'Free market' capitalism says:

a) Private property is good and people should own productive capital.
b) A true free market exists.
c) Transactions costs, in their various forms, must be minimised.
d) People should be able to own their homes.
e) Public investment should be made as economically as possible.
f) Private investment should be made as economically as possible.
g) People should receive income from their capital investment.
h) The National Debt should be at least diminished if not
eliminated.
i) Inflation should be minimised, even eliminated.

Concerning the above, Binary Credit ensures that:

- a) All individuals come to own substantial amounts of productive capital.
- b) A true free market will exist. At present there is only an unfree
market. The most potent markets of all - the productive capital markets - are closed to most people.
Binary Credit, however, allows all individuals to participate in the markets for productive capital.
- c) The biggest transaction cost of all - interest - is substantially eliminated.
- d) People may buy their homes at one half or one third of the present cost.
- e) The cost of public investment interest (which can double or treble a cost) is mainly eliminated.
- f) The cost of private investment interest (which can double or treble a cost) is mainly eliminated if wide ownership is promoted.
- g) All individuals receive income from their capital investment.
- h) The National Debt is considerably diminished and eventually eliminated.
- i) Inflation is minimised, even eliminated.