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The Prime Minister

10 Downing Street

London SW1

05 March 2000

Dear Prime Minister,

Interest Payments on National Debt

It was with great interest that I learned about your comment on Newsnight on Monday Feb. 28th, that made the connection between the cost of interest payments and the cost of the NHS. As Labour MP Norman Smith said in 1944: “There is always enough money for war, but never for health and education”.

If indeed New Labour wants to tackle poverty, if New Labour wants to deliver what it promised its electorate, it needs to dare what Mrs Thatcher did not do. She said that public expenditure can only be financed by borrowing (thus adding to interest payments) or by taxation.

There is, however, the “third way”: the Government can create interest-free notes and coin. Some economists will tell you that ‘just printing money’ will cause inflation. They forget, however, that banks do exactly that: ‘just creating money’. But when banks do it, it is not only accepted but seldom questioned on what authority they increase the money supply.

However, why should Governments be eternally indebted? The past has shown that the National Debt can be virtually eliminated. The future can show that the National Debt can be paid off, if you are committed to the third way, a new dimension for Governments taking financial charge and thus ensuring not just a voting but an economic democracy.

We were told by the Treasury that the Government wouldn’t know how to spend the money that it creates. However, as you do want to improve the NHS, you obviously know exactly how to spend the interest-free money that would add to your budget – in the third way – beyond taxation or borrowing.

In fact, you could go as far as creating money to pay off the National Debt. Would you like to use us as a Creative Think Tank for how to prevent Welsh Farmers from killing themselves because of financial problems that are systemic rather than personal? Would you like to use concerned citizens as systems analysts who can think ‘outside the box’ that has become the norm world-wide ever since the Bank of England was founded?

Should you be in any doubt regarding the above realities, we can supply you with a bibliography and ample references including our submission to the House of Lords’ Select Committee on the Monetary Policy Committee of the Bank of England.

We look forward to seeing the NHS funded through your Government creating money and wish you all the success you deserve.

Yours sincerely,

 

Sabine McNeill

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