A Return To The Groat?

There was an interesting article in the Scottish Review yesterday - "Scotland needs to escape from the chains of sterling".

As I have little knowledge of monetary systems, I wonder if the writer's suggestion would be feasible in an independent Scotland.

However he does sum up the current situation neatly:

The financial crisis however is not moving on, indeed is getting worse. The US dollar has lost most of its post-war credibility, the euro experiment is an all-round disaster and the parlous state of sterling is obscured by the labyrinth of smoke and mirrors which is the City of London.

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Credit Action

Sometimes I need to be reminded how many people manage to cope with debts they cannot pay. 


Since the economic collapse I thought people would realise the dangers of borrowing but the opposite appears to be happening. Companies like this have sprung up and interest rates can reach ludicrous levels, yet people continue to borrow.

Here are some striking numbers of UK DEBT Statistics from Credit Action :

• 9,072 new debt problems dealt with by Citizen Advice Bureaus each working day (as at March 2011)
• 1,688 people made redundant daily
• 112 new people became unemployed for more than 12 months every day during the 12 months (to end June 2011).

• £55,814 average household debt (including mortgages)
• £176m personal interest paid in UK daily

• every 14.6 minutes a property is repossessed (99 properties were repossessed every day during Q2 2011)
• every 4.31 minutes someone will be declared insolvent or bankrupt

• Total UK personal debt at the end of July 2011 stood at £1,451bn

Individuals currently owe nearly as much as the entire country produced between Q2 2010 and Q1 2011.

• 334 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 59 seconds during a working day.
• The average cost of raising a child from birth to the age of 21 is £27.50 a day.

£248,500,000 is the amount that the Government Public Sector Net Debt (PSDN), including financial interventions, will grow today (equivalent to £2,876 per second).

With 97% of money issued as debt, in order for some individuals to be debt-free, others must be in debt.

This creates a situation where we are all fighting in effect to ‘keep our heads above the water’ – to avoid being the one who falls into debt.

However, it is mathematically impossible, when all money is created via banks making loans, for the public as a whole to stay out of debt. If you manage to stay out of debt, it means someone else has to sink further ‘under the water’ in order to maintain the money supply.

In contrast, when we would create money debt-free through the Bank of England, we could:

• reduce the debt burden of the nation - by allowing the government to clear the national debt, reduce taxes, and/or fund better government services (and putting more money into the hands of the public through the salaries of public sector workers and government contractors).
• raise the standards of living year on year – by adding to the nation’s infrastructure and reducing the proportion of our money supply that is debt. As our debt burden falls, our repayments will fall and our disposable income will rise.
• reduce the risk of financial crisis – by increasing the money supply by a lower annual rate, thereby preventing inflation or asset bubbles in the housing market and other speculative bubbles;
• increase economic stability – by ending the money-creation that fuels risky and excessive lending, we’ll end the pattern of ‘very good years’ followed by ‘very bad years’.

We can remove banks’ power to create money, and use that privilege responsibly for the benefit of society and the economy as a whole.

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