A False Dawn

The feeling I had when I woke up with this morning was quite unusual: after going to bed at about 1:00am and feeling chipper about the referendum, I’d dreamt that we’d left the EU and felt a strong sensation of dread. I woke up and thought, “This better not be real,” checked the news and saw it  – It was like a bucket of ice water and loose change had been chucked over me.
As far as I could see, the main difference between this event and every major political change that has occurred recently in the UK – re-election of the Conservative party, passing of the 2015 counter-Terrorism & Security Act, raising university tuition fees etc., is that the effects of this referendum are immediate. By this I don’t mean that we’ve left the EU overnight, but that the decision is binding; once the results are in, that’s it, the decision’s made. Secondly, the vote was deeply personal for a lot of people. 72% of the UK turned out to vote, which means the issues that come out from this decision will have personal resonance for people. And thirdly, unlike every other major event that’s happened to the UK, from regressive tax legislation to housing benefit cuts, you know that at least these changes are potentially reversible. When the Conservatives were voted into power, we knew that we’d have the chance to boot them out again after six years.

With this referendum, however, the effects are most likely permanent and will cast a long shadow over this generation, which inconveniently, is my own. If I was a happy-go-lucky pensioner with a couple of years left before I croaked, I might’ve had the opportunity to vote Leave in protest of an undemocratic European Commission. But considering that these are my own future prospects that I’d be crapping on, I figured playing it safe was the sane option. It’s a shame that a number of my zimmerframe-wielding neighbours felt differently.

It isn’t just my petty career prospects, such as they are, were diminished by this vote or voter demographics, but the psychological meaning of Britain for the rest of the world. Is it ever going to be the great colonial power that it was? No. Is it going to retain its status as the English-speaking gateway between the US and the single-market? Probably not. As I hinted before, I didn’t think the Leave campaign had a snowball’s chance in hell of winning the referendum. For whatever reason, the closeness of the polls and strength of the nationalistic rhetoric of the 20p newspapers did not hit home.

Probably because I am about as far away from an anti-immigration mindset that one can possibly be. And furthermore, the fact that I’ve been spending the majority of my time whizzing up and down between Glasgow and London, two of the most remain areas in the UK, and the fact that I’m fairly privileged in the sense that I’ve never really had to worry about money has resulted in me living in my own little Remain bubble, blind to the concerns of the working class. Though I imagine a lot of Leave voters, voting only in protest, woke up this morning with the same feeling that I did, only just realising the full significance of their vote. And I suppose the Remain camp didn’t see the full consequence of their promising this referendum until they saw the almost uniform voting of Scotland N. Ireland and the Republic of Ireland, to stay in the EU, and are now facing a potential break-up of the United Kingdom.

Most politicians fuck up badly at some point in their career, but I wonder how you respond when you’ve fuck up so bad that you’ve potentially destroyed a 400 year old political union? Go to a hotel room and drink all the mini bottles of liqueur until you pass out? Or hide yourself under several layers of duvet until you convince yourself that the world doesn’t exist? In any case, they really put their foot in it.
But for me, its the feeling of waking up that stays with me the most. It was almost as if I’d woken up in the wrong alternate reality, and I kept blinking to try and get to the right one. And now I have to deal with the consequences of something that I never even wanted in a million years.
So yes, I am understandably, alarmed and annoyed. But another part of me is saying there’s no point in being so apocalyptic. Yes, this vote will probably hang over me and my peers for the rest of our lives, and possibly has permanently diminished England’s standing on the world stage, but as a wise man once said there’s also no point in worrying about things you can’t control. For my purposes at least, it seems much better to try and see the absurdity of it all and take a detached view and see everything from above; like our disappointed forbears who first brought us into the EU (Ted Heath) and brought Scotland and England under the same legislature and Crown. Then maybe I can get out of this shit show with my sanity intact.

How Banks gained control of the power to create money

For a subject that is so central to our lives, banking and money creation, it is amazing how much confusion surrounds it.  Yet eight years on from the financial crisis, employment has shifted to a new normal of low-paid, low-skilled jobs, wages remain stagnant and the majority of gains from the recovery have gone to the super-rich. What’s gone wrong? According to Advocacy group Positive Money, it’s down to our misunderstanding of the money creation process in the UK.

 Positive Money have been analyzing the shaky foundation on which the modern monetary rests and in doing so have revealed misconceptions almost everyone, from top economists to members of the Treasury, holds, which could go some way in explaining how the banking system have managed to swindle the public for as long as they have. So, with that in mind, I have listed the top five myths about banks and money creation that turn out to be totally counter-intuitive, and may account for the continuing anaemic recovery that our country is facing..  

Myth 1: Banks create loans using other people’s money.


“Abraca-accountancy trick!”

The first major myth-busted by Positive Money is the process by which banks create money. Contrary to popular belief, Positive Money’s findings say banks do not act as intermediaries between depositors and borrowers.  In fact, other deposits are not even necessary for the creation of loans.  In reality, the process by which loans are created is sickeningly simple: loans are effectively created out of nothing by typing numbers into a computer system, which then appear as a deposit in a bank account.  It does not depend on the deposits of others and only exists in the memory banks of a computer . Sounds too simple to be true? I’m afraid Bank of England’s own literature on the subject confirms this:

“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.” – Bank of England (2014), Money creation in the modern economy

So how is this done? New money is essentially created as a bookkeeping entry, with the loan representing an asset and a liability on the bank’s balance sheet. This basically means that the bank writes down on a balance sheet the amount that the bank deposits into your account (their liability), and what you owe back to the bank (their asset). And this process entirely, without the use of other sources of money,  is what creates credits money into n your bank account, which actually creates new money as interest-bearing debt. So money creation is actually more of a conjuring trick than a real financial transaction.

Myth 2:  The Bank of England controls the money supply 

Rather than the Bank of England directly controlling the amount of money in the economy, this important and esteemed role is given to commercial banks. If you thought, ‘hang on a second, I thought the bank of England prints money?’ You are correct. The bank of England does print notes and coins. However, physical cash only accounts for around 3% of all the money in circulation.  The vast majority of money is created by banks as electronic money, and as only a very small proportion of money ever leaves bank accounts to become physical cash (i.e. through ATM transactions)  the overwhelming majority – about  97% of all the money in the circulation – exists as bank deposits. So, as the system stands now, the money supply in the UK has effectively been co-opted by the banks. 

Myth 3:  Banks merely ‘oil the wheels’ of commerce

If banks have the ability to create money over the Bank of England, that effectively leaves banks with the power to create and allocate the country’s money. And they certainly do not wield this power delicately. Lending in the 40 years before the financial crisis increased the amount of money in the economy by an average of 11.5% a year much of which was funnelled into property and stocks.  For instance in 2011, only 8% of total loans went to the businesses, while 20% went to the financial sector and 56% was used for mortgages. This led to rising mortgages and rents, raising people’s expenses and leaving less money to spend in shops and businesses in their local area. So the banking and financial sector gets richer, at the expense of the productive economy.

Myth 4: Money is intrinsically valuable

This may come as a bit of a kick in the teeth, but the money we use in the economy is not really money, it’s debt. That may absurd but this is accurate due to the nature of our system of money creation. If new money can be created out of nothing, then it must follow that an equal sum of debt must also be created with it-any self-respecting Bible scholar would be familiar with this concept (‘That which is nothing must return to nothing’). A consequence of this is that whenever the government states that we need the economy to grow faster, the government will encourage people to borrow money and go into further debt to the banks. We have already seen how this has lead to mounting personal debt- at the end of 2013 personal debt stood at £1.424 trillion. However, because  it is necessary to further into debt to the banks in order to increase the money stock, when people finally want to pay debts back, this removes money from the economy. If too many people attempt to do this at once,  the economy goes into a recession. So this leaves us in a Catch-22 type situation; either we load up on debt until we are forced to default on them, or we pay down our personal debt, removing money from the economy in the process, leading to a recession. This is also part of the reason why Austerity hasn’t work, and why Osbourne has had to borrow more in three years of government than Labour did in the last thirteen, because people had to spend a greater proportion of their income on debt interest, leaving less money for taxes and so making it necessary for the government to borrow more money to make up for lost tax revenue. So essentially, the monetary system that we have makes it impossible for our economy to grow without debt.

So what is the solution? That’s still up for debate. Positive Money have proposals for a sovereign money system returns the power to create it to a public, accountable body, but other proposals, such as for a new form of electronic-issued state money, have been offered too. But the fundamental problem of ignorance around the subject remains.  If people remain realise that money is a changeable human institution rather than a fixed law of economics, then it is possible to create a new monetary system that works in the interests of society as a whole rather than a select few.  Joris luyendijk, Guardian Columnist and author of the banking book, “Swimming with Sharks”, wrote that banking is like “Playing Russian Roulette with someone else’s head.”I think it is time banks put their own head on the line rather than everyone else’s.


Why Data-Protection Matters

It annoys me when people say that surveillance doesn’t affect them because they’ve, quote, ‘done nothing wrong’.

Though I empathise with the fact that some people genuinely do feel they have nothing to hide or believe that the state should have as much power as it can obtain in order to protect us from terrorism, the suggestion that data protection is irrelevant for people who believe they have nothing to hide is to misunderstand the issue with ubiquitous surveillance.

The purpose of data protection is not (or at least, it shouldn’t be) to provide a tool with which to hide ones wrongdoings and offenses, or to provide a ring-fence within which criminal-types can hide, but to provide people with a protected space in which people are free to think and express what they want without the fear of intrusion. This obviously does apply to everybody, because everyone does, presumably, want to be able to express what they want, without fear of future repercussions of what their words might mean for them, or without instant judgement.

People have a powerful psychological need for their own private, personal space where they feel they can’t be ‘got to’. Most people enjoy the fact that their overbearing boss, nosy colleagues or any other person that they would wish to get space from cannot get into their home without them permitting them to. It is even true that those who claim privacy has no bearing on them actually do have a genuine need for it. For instance, if these people don’t need privacy, why do they have locks on their bedrooms? Why do they close the door when they go to the bathroom? Why do they use passwords on their computers and emails?

The need for privacy also becomes apparent when events occur that deprive us of it. For instance, it is often said that the worst part of being burgled is not deprivation of your valuables, (though this can obviously be a huge part of it)  but the sense that your privacy has been irrevocably and irreversibly violated – I can attest to this personally. It is a profoundly mind-rattling to return to your house to find your front door has been barricaded and all your most cherished belongings and documents strewn all over the floor. The fact that some people don’t realise that online privacy is simply an extension of the need for privacy that everyone feels on a day-to-day basis is because this kind of intrusion is a lot more insidious and harder to spot.

For instance, most people aren’t even aware of the myriad ways that ISPs, tech giants and government agencies spy on our online behaviour. As well as collecting metadata about online activity and phone calls, (the time and location of a phone call or email) agencies are able to access real data (internet searches, history) through programs like TEMPORA that directly tap ISPs. Apart from that, online trackers used by advertising agencies build up long-term profiles of your browser activity and, if you navigate to a social networking profiles like Facebook or Linkin, can even collect pieces of information that personally identify you. Some IMSI Catchers, which are “fake” mobile towers that act as middle men between targeted mobile phones and the service provider’s real towers, can even intercept calls and SMS. The question arises, if you knew the extent to which these organisations were viewing and tracking your behaviour, would you be behaving in the same way?

It is a well known fact that people behave differently in public than they do in private. Michel Foucault wrote, in Discipline And Punish, about this phenomenon of the ‘Pan-opticon’ in 19th century prisons, and countless scientific studies, (such as the “Hawthorne Factory experiment“) have shown conclusively that people behave differently when they know they are being observed, especially when they don’t know who they’re being observed by at any given time. So what are the potential effects of people finding out about spying programs being operated on them? Self-censorship. This effect is particularly marked when looking at the impact on writers. For instance, a study by PEN International found that US writers are increasingly restricting their own search terms and topics of conversation, with 16% deliberately avoiding speaking or writing about certain topics, and 24% avoiding certain terms and topics in phone conversation. And this makes sense, because we don’t know how what we write about ourselves will affect us in the coming years and decades, as we don’t know what laws they’re going to be in the future, as well as what kind of government authority will enact those laws.

However, this kind of self-censorship is the antithesis to online democracy. It stops people being open and expressing what they want when they’re otherwise law-abiding citizens. So in some ways it can be considered self-defeating, these people who say privacy does not bother them, because it affects them too, whether they acknowledge it or not.

Thank you, ‘ZeFrank’

I just watched ‘An invocation for Beginnings’ by ZeFrank, Youtube comedian and all-round zany guy. His video really touched me in a way I didn’t expect. I only clicked on it half by accident, remembering him from some Reddit post and just typing in his name hoping to find something funny to watch. I wasn’t expecting to be ‘moved’ or find it ‘inspirational’ in anyway, as clichéd as that term is, but I did. That’s because I think I really identify with what he said near the beginning, about being stuck between 0 and 1, wanting to begin but not quite being ready. I’ve been stuck in that state for quite some time, wanting to create and write stories and articles, but not quite allowing myself to. I know it’s probably got something to do with my family and fear of failure, and the expectations I put on myself, but to see my fears vocalized and expressed in such a creative and accurate way by Zefrank, who I someone I look up to, is really quite powerful.

It makes me think just because I’m having a hard time now breaking free of my worries, doesn’t mean that I will always be stuck in this plane of creative uncertainty. And it proves to me that it’s possible to transcend this state and go on to become a true expression of my own creative impulse, and truly I can’t think of anything more exciting than that. So thank you, ZeFrank, for making your video and your contribution to all would-be writers/artists/all-round creative people by reminding them that their struggles are not unique to them and it is possible to move out of that state into one of creative fulfillment. I hope this is just my first step towards that journey.

His video below, in case anyone’s interested:

TPP: The most brazen corporate power grab in history?

On Thursday, the full text to the secretly-negotiated TPP trade deal was finally released online. Alternet’s Chris Hedges wrote a very comprehensive and scary summary of the deal, quoting Ralph Nader in the headline as stating: “The TPP…is the most brazen corporate power grab in American history.”

Let me briefly outline some of the reasons why this landmark deal is so scary. It contains provisions for investor-state dispute settlements, (ISDS), which essentially overrides a nation’s judicial powers with secret tribunals, to declare anything that hurts it’s profits as unlawful.

That’s right – anything that hurts a corporation’s profits could be considered unlawful: which could include anything from pro-competition laws to environmental or health protections, to basically anything that puts the interests of society above the profits of a private corporation.

This is scary stuff. Part of what makes this concept so scary are the clauses involved. Such tribunals would exclude environmental and advocacy and labour unions from seeking redress, and the corporation could be eligible for compensation from taxpayers.

But I think what is most telling about this bill is the secrecy under which it was negotiated. In an unprecedented legislative process, the TPP was barred from discussion by the public and Congress due to Fast Track, a tactic designed by the Nixon administration to circumvent democratic debate

I think we have to question the justness of such a trade agreement that is produced under such clandestine procedures – the only glimpses the public has seen of this bill before now, in the six years it has been negotiated, have been through leaks of its most controversial provisions.

Given this development, and the new surveillance laws proposed by the UK government, I increasingly feel we are moving into a world that is on the one hand more populist than ever, due to the dominance of social media platforms, yet on the other, with countries bowing to their corporate masters and citizens’ rights being eroded, more divided. Do I think that this is a shift to a new world of corporate feudalism? Yes. Do I like it? No.

Whether or not this agreement will be passed is as of yet undetermined It really does depend on well-directed opposition from activists and Congress. Yet I do know that if the corporations succeed in passing what has been an incredibly brazen and gratuitous bill, it may demonstrate that the age of democracy in the US has passed.

In the words of Youtube’s Natalie Tran, this deal is “unbolievable.”

How do you solve a problem like Jeremy Corbyn?

Corbyn refuses to stick to the script of austerity, and the establishment is running scared.

The issue of the Labour leadership contest has been bubbling away on TV, now for presumably months. I’ve barely tuned in, assuming watching a party that has become entirely unmoored from its progressive roots too demoralising. Anyway, I find watching the news for long periods of time depressing, so I didn’t really know who Jeremy Corbyn was when I finally turned on the news. I was impressed when I finally did. He seemed unassuming, principled and unpolished. I ended up watching the news and discovered this unknown man was winning the race, and everyone else was running scared. This humble man seemed to terrify everyone; the news media, political grandees, business tycoons. Then I realised – it was because, unlike the other candidates, Corbyn appears to be not talking in circles. He seems fiercely ideological and down-to-Earth. He did not seem willing to cut deals at the cost of ideology. As Rupert Murdoch pointed out, he is the only politician in the race who ‘seems to believe anything.’

After watching the segment on the BBC, I scoured YouTube for interviews with him and found one with him and Owen Jones, the left-wing political commentator, which I supposed wasn’t the most impartial source, but I just wanted to hear the guy articulate his views.. Watching this quiet man, he seemed bewilderingly level-headed. He was talking about his plan of ‘People’s Quantitative’ easing: creating a new national investment bank that could issue debt to modernise our decaying infrastructure – in effect bypassing the banks. As I heard that, I felt my heart dip. Why? Because I realised what this man was talking about might actually work.

His proposals seemed weirdly relevant to real-world issues. Like he wasn’t trying to convince me of some other reality where cutting taxes for the rich created jobs. There was no vague suggestions to tinker with legislation, empty calls for public sector workers to raise standards using unchanged resources. He actually had a plan to meaningfully affect the lives of ordinary people. It seemed so, unexpected. What the pundits on TV are calling ‘unelectable’ I think is actually just a striking unwillingness to ‘play the game’, and that is what’s so unsettling about him. However, what shocked me most in the interview were his claims about the consequence of raising corporation tax to 20.5%:

‘If instead of cutting corporation tax to 18%, we raised it to 20.5%, 0.5% increase, that would be enough to pay for student fees for everybody.’

It just seemed to make so much sense I couldn’t believe I hadn’t heard it suggested before. And more importantly, why hadn’t the rhetoric that I’d heard in previous elections strike me as just as common-sense? I remember feeling at other times, such as when George Osbourne tried to justify his new budget in July, that they were trying to weave a narrative to convince me I was living on another planet where their proposals made sense rather than the world we actually live in. For instance, the idea that continuing austerity is necessary to get the economy ‘back on track’, when all the evidence points to its harmfulness to the economy and depressive effect on wages.

An unsettling figure like Corbyn could be the start of a new type of politics that doesn’t play by the rules of those in power. It could be the beginning of a grass-roots movement of people who want politics to represent their ideals and beliefs, rather than what the regurgitated pablum that the media elite wants them to believe. This could be a significant movement away from politics-as-usual.

The problem with money

One thing you may or may not know about our current monetary system, and why we’ve had the longest post-contraction slump since the Great Depression, is how money created. How money is created is such an oft misunderstood process that the Bank of England, until very recently, did not have any literature on the subject. This surely has to be an indicator of how fucked up things currently if the central body for the regulation of the monetary system had no documents on how money is created.

But let’s outline the crux of the problem; a commonly held misconception is that banks create loans by taking money out of someone else’s deposit and entering it into your account. Loans are actually created through a wizardry of bookkeeping called ‘double-entry bookkeeping.’ To do this, the bank does two things: In one column it enters ‘liabilities;’ what the bank owes to depositors, and creates the money which is then put into your account. The second column, ‘assets,’ are what borrowers owe to the bank, the money that has just been loaned for you. This system kind of works because the money that has been created and the money that is owed balance out. But the most mind-boggling and incomprehensible part of this system is – this money has just been created out of thin air! Nothing, except the faith of consumers and businesses in this bank, lies behind the debt created by the bank. And this is a extraordinary problem, because an overwhelming majority of the money that circulates in our economy is electronic; 97% of the money, existing in transactions between bank accounts. Because such an overwhelming amount of money is created privately; the banks benefit from being the predominant supplier of the UK’s money to the tune of £200 billion annually.

So does this seem like a good system to you? Aside from the fact that £200 billion of the public’s money is channelled to the financial sector via this quirk of the monetary system, which of course puts a strain on individuals and businesses who have to run even faster on the hamster wheel to pay the money back, it causes an impossible problem when it comes to actually having to pay the money back. For an individual, it is of course beneficial and advisable for them to pay their debts. Unfortunately, because every pound in your bank account must equal a pound of debt for someone else, the moment everyone tries to pay back their debt at the same time, almost all money would be drained from the economy and it would collapse. This seems to be a very relatable problem at the moment, in the atmosphere of ‘high austerity’, where it seems to be broadly accepted that the financial crisis was caused by the government living ‘beyond its means’ rather than a greedy group of individuals speculating and investing in financial products they didn’t understand leading to the whole economy being held hostage. And so the prevailing economic policy of the last 5 years has been ‘austerity’ (which we have fallen for hook line and sinker) which has not only led to the longest post-contraction economic slump since the Great Depression, but has totally failed to meet any of its targets for paying back the debt. The Conservatives were right in their 2010 manifesto ‘we can’t go on with an economy built on the old model of debt’, but they failed to understand that is how our economy is fundamentally structured, and if you don’t change it, and then try to pay back all the debt, of course it will wreak havoc with the system.

But what do I know? I’m just an ignorant, computer-literate teenage girl who has an interest in these things, but I’m quoting from people who really understand the economy. These are from the positive money page. This is a quasi-thinktank/pressure group/campaign to try and change the monetary system so that the power to create money is put into public hands rather than private institutions. They have a vision of an economy where banks are only able to lend money given to them by other depositors, not this ludicrous situation where it is magicked out of thin air, and we can all enjoy a more stable financial system. Check out their website here: http://positivemoney.org/

Meanwhile, I’ll just be sitting here in my swivel-chair, silently fuming and trying to think of more ways I can be an armchair anarchist.