The Twelvth Mitchell Way

Dear Editor

Following your article 10 ways out of the credit crisis by Sean O’Grady, we suggested an Eleventh Chinese way as signatories representing a number of citizen groups.

Since then, eleven MPs have signed EDM 1449 which proposes to tax the profits of credit creation.

This is a completely new approach for the Government to deal with the credit crisis created entirely by the financial industry.

So far, Austin Mitchell MP’s EDMs relating to monetary reform focussed on the “cash crumble” that has been happening steadily since WWII.

Now that virtually all money in circulation is generated as credit, Nobel Peace Prize winner Muhammad Yunus who recently visited the Prime Minister says “access to credit should be recognised as human right“.

Instead of the Government feeding banks with yet more money, Austin Mitchell MP says “credit creation needs to be taxed at source”.

In 1944, Labour MP Norman Smith said: “There is always enough money for war, but never enough for health and education.”

In the face of global climate emergencies, should we not put our best thinking together and overcome vested credit interests?

Yours sincerely,

Sabine McNeill, Organiser, Forum for Stable Currencies

Barbara A. Panvel, New Era Coalition

Mary Fee, LetsLink UK

Dave Wetzel, Chair, The Professional Land Reform Group


14 responses to “The Twelvth Mitchell Way

  1. This goes some way to compensating for the banks’ exploitation of the system; but doesn’t address the problem of ever-growing levels of debt, or stop the banks just raising interest-rates to compensate for the tax – which would exacerbate the problem.

  2. Dear Sabine,

    I am afraid that I do not like EDM 1449. For a strart the Northern Rock was a bank and not a building society. This is a crucial difference. Banks create credit, building societies do not. Blurring the distinction between them is not helpful, given that we want banks to act like building societies (taking in existing money and only lending that to borrowers).

    Secondly, I do not think that the money reform movement will help itself by advocating increased taxation – on anything – as people will correctly judge that the ultimate payers of such a tax are themselves as customers of the banks.

    We need to present an alternative which associates money reform with a reduction in taxation.

    I have such a proposal which I have been circulating locally. I shall get copies off to Party members next week.

    Best wishes

  3. Hi, Anne,

    Thank you for your thoughtful comments. I see it from a very different perspective: the challenge of getting MPs to be educated and the issues debated.

    I’m not a purist in that way. Austin has always felt too lonely. Now he’s seen the support, he felt re-inspired and re-energised. He’s the most reliable MP we’ve got so far.

    Hence I’m happy to support his latest EDM.


  4. Yes, Brian,

    you’re right. But we can’t expect Austin, let alone any other MP to be up to our speed!…

    But remember that there are eight EDMs that addressed the problem previously. Mary listed them all nicely on http://www.forumforstablecurrencies.

    Here’s an approach that is ‘topical’!

    With many thanks,


  5. Dear Sabine,
    First, thanks for all your efforts forwarding the cause of money and banking reform.
    May I raise once again my long-standing point that we need the funding of political parties by special interests (be they corporations or unions) to be banned, before we can bring about the necessary money and banking changes. For he who pays the piper calls the tune.
    David Weston
    Democracy for a Change.

  6. You’re right, of course, David,

    However, I can only make one step at a time and talk to one MP at a time. EVERYBODY has their own agenda, their own conviction of what is important.

    How to communicate that to whom is our challenge. Here I’m writing one letter – sort of on behalf of one MP…

    “Little steps for little feet” has always been one of my mottos…

    With lots of appreciation for your deep thoughts and especially the input I receive from your list,


  7. I tend to agree that a tax, if implemented, would merely be passed on to the consumers to pay.

    But Sabine’s point that the motion is raising awareness about the issue is a valid one. So let it go on and give it support, even if a tax would not be the best instrument to end the profound injustice of banks charging interest on money that is not theirs but is created by them FOR the customer and on the strength of MATERIAL WEALTH of the customer given to the bank as a security …

  8. Yeah, yeah, Sepp. Cynically true! But let’s face it: even the Tobin Tax has never been implemented!

    Let’s just look at an EDM as a tool for communicating with MPs and journalists.

    And let’s use this EDM as a hook and a bait. Who knows what it might trigger: it’s topical and full of anger.

    What’s wrong with spreading its existence?

    But we each make our own choice about what we’re communicating and to whom.

    Fortunately, the net gives us lots of new tools with which to do so.

    At least I enjoy it. Hope you, too!

  9. I’m delighted by this EDM because I’m convinced the best way to control money creation, asset bubbles and recover seignorage for the public purse is the taxation of the credit banks create.

    The mechanism is like Land Value Taxation, and like LVT it is a tax that cannot be passed on by the banks in higher interest rates. Anne please note.
    The banks cannot increase the interest rate to borrowers because they already screw every last penny out of mortgagees. In order to recover their profits they’d have to decrease the interest to savers, charge all customers transaction charges, etc. Their income would than come from all their customers and not primarily the borrowers.
    Banks make 7% on the money they create out of nothing, but only 2% when they lend money they’ve taken on deposit at 5%. That is what a Building Society makes. (Though many a BS lends money from ‘wholesale banking instruments’!! i.e. acting as an agent of banks)
    So tax could be imposed at up to 5%. Connal Boyle estimated that this would bring in £70 bn p.a. In effect this is ‘seignorage’.
    Taxation above this 5% level would be less profitable than taking deposits to lend out. So at that point banks would stop creating money out of nothing and behave like Credit Unions.
    Government could control the amount of credit money in circulation by adjusting the tax rate above or below this rate.
    Note that a govt spending department, e.g. Home Office, could borrow at 7% with the interesting effect that the Treasury gets a 5% ‘kick back’ in tax revenues.

    Who ever thought up this EDM?
    It could be a winner. We just need a hard sell exposing the 5% the banks make on money made out of nothing. The public thinks they only lend out deposits! They’ve no right to interest on money they’ve not taken in deposits. It should belong to us all. Money, like Land is one of the ‘Commons’.
    It could also be a winner because the public are in a mood to punish the banks that have got us into such a mess.
    It could also be a winner with MPs who always want to spend more money. Though the more thoughtful might see that it should be accompanied with a similar tax reduction elsewhere, e.g. reducing VAT. Reducing VAT would of course be deflationary – a good idea as inflation looks the only way for politicians to square the circle of negative equity that any other cure entails.

  10. Hi, Bill,

    this EDM is entirely Austin Mitchell MP’s idea – but clearly inspired by the event of the Attwood Award. For he needed to see and feel the groundswell of support and not just me prodding him for another EDM!…

    It’s the “topicalness” that’s the winner, I hope.

    And, yes, PR is the next best necessity!

    Watch this link to watch the number of signatures:

    With many thanks for your encouragement,


  11. Are you all SURE that only banks create credit and building societies do not? Looking at eg the Nationwide’s (biggest UK) building society I just can’t reconcile their enormous profits with the idea that they only lend out their depositors’ money or that they borrow it from the money markets or BoE to lend it on. Even selling on debt, securitisation, etc can’t account, to my mind, for their bumper levels of profits. Nationwide also says it doesn’t get involved in derivatives or currency trading for speculative purposes, so no accounting for the great profits there either. Furthermore their branch network is enormous too with one on almost high street so a huge overhead to fund there as well which I also can’t reconcile with not creating credit to be able to fund it. Their directors remuneration also seems relatively huge too (even for a high street fin. institution) and ever growing each year. Their Swindon etc head office is also a huge complex.

    I hereby respectfully request that everyone who asserts that building societies (unlike commercial banks) do NOT create credit to please substantiate this with authoriative sources of experts- (not just comment by Joe Public please) either experts’ books or websites that I can read myself. Also, is there a statute or constitution on building societies that you have read that makes you believe they don’t create credit like the banks and may I ask you to cite it please?

    Thank-you for any assistance.

  12. By the way everyone I should also add to my comment just now- I just found the following at -in an article titled “Money From Thin Air” (6/2/07) the following:-

    “…Rowbotham charges that the vast bulk of this unreal money has been created through the mortgage market. Hence the title of his book – ‘The Grip of Death’ – which he puts forward as a literal translation of “mortgage”. By issuing a mortgage loan, the banks AND BUILDING SOCIETIES [my emphasis] create money out of thin air which then sits on their books as an asset, awaiting repayment by the borrower…

    So here is someone asserting in quite an authoritative article, that building societies also create credit. Again I contend to you that I just can’t reconcile eg Nationwide’s bumper profits with not being able to get that (and fund their huge branch network & head office overhead) from the revenue stream (interest, set up charges etc) on credit they created from thin air. Your comments, would again, be appreciated.

  13. Dear Tony

    Sorry for the late response to your most interesting comments – I was in the ex-DDR without broadband. Yes, you’re right: building societies have been turned into companies with shareholders who now pay the pipers and thus determine the tunes…

    I can’t cite anything, but I vaguely remember a reference to some act – another contribution to my thinking that the collective law making process is not nearly as important as the individual ethical question…

    We do live in ‘interest’ing times!

  14. Thanks very much for the trouble of your reply. Just one more question though if I may- you say Yes, you’re right: “…building societies have been turned into companies with shareholders…” but don’t you mean by this Bsoc’s which have DE-MUTUALISED (now PLCs in UK) ; I was talking about Bsocs which are still mutual- Nationwide being an example and I was contending that I suspect even THEY create credit. But I’m not 10%% sure and would like further comments.

    Thanks & Regards…

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