Thursday, February 27, 2014

Scottish pound-dependence

It is only right that the debate about Scottish independence should focus on the question of currency, yet it still entirely misses the point: No matter how they vote in the forthcoming referendum, Scots will not be set free. The question so hotly debated at present as to whether a potential independent Scotland should retain the pound and form a monetary union with England is one where, as so often in the so-called democratic process, only false options are presented, the alternative to keeping the pound being to join the Euro. Two sides of the same coin, really, for either way Scotland's future prosperity or lack of it will be decided by financial institutions which are not subject to any form of democratic control.

A country, or more to the point: a people, which does not control its own currency cannot be deemed an independent or free country. Monetary policy is the tool by which the political will of a nation is made to yield to the interests of private owners who create artificial scarcity or abundance to dictate its economic and political climate. By a clever process of officially sanctioned and legalised fraud, almost all of today's nation states are in debt. To whom, one might ask? Who is that illustrious lender whose assets exceed the resources of all the countries in the world? Of course, no real assets were ever involved. Through the process of fractional reserve debt-finance bankers have bought whole countries with fiat money that never actually existed or, rather, was never backed by any real wealth as such. True independence means to take that control back from them and return sovereignty, political and financial, to the people. A vote on Scotland's independence, whilst it would present such an opportunity, will never be allowed to go as far.

I put these matters to Alex Salmond years ago in a public meeting, long before the Scottish parliament had even been instituted, and his answer was telling. He understood very well that government could create its own money rather than mortgaging the wealth of the nation to private interests creating the same money for them - for in either case the money is created backed by nothing except the creditworthiness of the nation -, but he wasn't ever going to see eye-to-eye with me on these matters, "he had been trained as a banker", he said, and therefore held different views. Prior to becoming a politician Salmond had worked for Royal Bank of Scotland (RBS), that very bank which the taxpayer had to bail out to cover their losses and which will be sold back at bargain prices to the private sector once those losses have been absorbed and it becomes profitable again. These kind of bail-outs remove the last justification for charging interest on "money created out of nothing", i.e. on lending in excess of the bank's actual assets, namely, that since the bank takes a commercial risk it should be allowed to charge for it. In reality, the bank creates the money on the back of the nation's ability and willingness to absorb such risk whilst still having the audacity to charge citizens and government bodies for doing so.

Like most politicians, the loyalties of Scotland's "First Minister" are to the banking fraternity which has catapulted him into position, not to the people whom he claims to represent, and if the fragmentation suits them, Scotland will get its political independence. As for financial and monetary independence, it would probably require a revolution instead of a referendum, and today's Scots no longer have the appetite for politics outside the ballot box. So Scotland, whichever way the vote goes, will remain dependent on the pound or the Euro, but either way on the goodwill of its bankers.