A full 85 percent of British politicians do not know where money comes from according to a new poll organized by Positive Money reported in CityA.M. Almost two-thirds of Members of Parliament surveyed wrongly thought banks cannot create money, while a quarter admitted they had no idea. 70 percent incorrectly believed that only the government has the power to create new money.
Fran Boait, executive director of Positive Money, said: “Despite their confidence in telling the public that there is ‘no magic money tree’ to pay for vital services, politicians themselves are shockingly ignorant of where money actually comes from.
“There is in fact a ‘magic money tree’, but it’s in the hands of commercial banks, such as Barclays, HSBC and RBS, who create money whenever they make loans."
As the Bank of England has taken the trouble to point out, most money in the UK — 97 percent — begins as a bank loan. The same condition applies to the US — about 95 percent of all the money supply in the US begins when a bank makes a loan.
Unfortunately, this privilege [to create money] is used in ways which don’t benefit most of the society. Over 80% of new bank lending in our economy is directed towards property and financial markets, which is making housing unaffordable, increasing inequality and resulting in more and more people drowning in debt.