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International finance | 11
Why the British
Economy Needs
a Fairer Currency
Bartercard enables account-holding businesses to
exchange goods and services with each other allowing
them to trade and grow without the need for cash or
credit from banks
by Wayne Sharpe, Founder and Chairman of Bartercard
T
he UK money supply consists of have tended to increase ‘national debt’ to
cash - notes and coins - and fund growth or fiscal stimulus packages,
credit, yet the ratio between the rather than repay the debt (inevitably
two has altered dramatically. unpopular with voters).
After World War II, 53% of the
UK money supply was in the Borrowing bonanza
form of credit – debt - issued by banks at The banks at the heart of the global
interest. Now that figure stands at 97%. In economy have also enjoyed increasing
effect, banks have a licence to print money deregulation in return for the ever-
and by making more money from credit, or increasing profits they were making. The
debt, the financial economy has become vast profits were possible because the banks
increasingly disconnected from the real were given free reign to replace money with
economy. financial ‘products’ and instruments as a
This situation has become inherently medium of exchange. Essentially this meant
unstable because the money necessary to pay repackaging assets such as mortgages and
for interest on credit is simply not there. loans and selling them on to other banks
Companies, organisations and individuals and financial institutions. It allowed the
have been borrowing money at interest to pay sellers to make money quickly and the
off more interest as well as capital. buyers to profit from the interest paid by the
The mathematics of compounding interest- lenders.
on-interest results in a cycle of boom and When the banks sold on these assets
bust. Because the money supply is controlled (mortgages and loans) they also sold on the
by central banks, successive UK governments responsibilities that came with them. As a
www.investmentinternational.com July/August 2009 Investment International
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