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Having been informed by Titus Alexander, supporter of Charter99 The Campaign for Global Democracy, I prepared the following document with four appendices:

Inquiry into the Global Economy

A Submission for the House of Lords Select Committee on Economic Affairs prepared by Sabine McNeill

1.0 Executive Summary

Stable Sterling is the constructive concept as a national and international policy. It would not only redress the detrimental effects of economic globalisation nationally but also enable the State to stabilise financial and real markets globally in the British tradition of trading.

Stable Sterling should be kept parallel to the Euro and issued by the State as interest-free M0. In this capacity and function, it would be

¨ primarily not a commodity but a medium of exchange

¨ a democratic mechanism by being accountable to Parliament

¨ free from the principle of usury and the exponential effects of compounding interest on interest.


2.0 Introduction

2.1 This submission is being written with the thinking of a mathematician, programmer and systems analyst. With that mind, I founded the first LETS (Local Exchange Trade System) in London in 1989, co-founded the Campaign for Interest-Free Money in 1997 and organised the Forum for Stable Currencies which has met in an House of Lords committee room since 1998. Forum meetings have regularly attracted Parliamentarians and citizens from the full political spectrum and all religious persuasions. I attended a number of meetings of the Select Committee on the Monetary Policy Committee of the Bank of England and responded to the Call for Evidence then.

2.2 Given the extensive documentation and charts put together as evidence then, this document answers only the questions posed while four appendices are attached as background. The next programme of the Forum for Stable Currencies is entitled The Growth of Monetary Reform Groups and will be sent to Members of the Economic Affairs Committee and both Houses of Parliament as it has been in the past.

2.3 Globalisation amounts to four radical changes in the world system, writes Richard K. Moore . These are:

(1) the destabilisation of and removal of sovereignty from Western nation states,

(2) the establishment of an essentially fascist style world government under the direct control of the capitalist elite,

(3) the greatly accelerated exploitation and suppression of the third-world, and

(4) the gradual downgrading of Western living conditions toward third-world standards.
By these means, elites hope to achieve yet another round of capital growth.

3.0 The Broad Questions:

3.1 How should economic globalisation be defined?

Globalisation should be called ‘dollarisation’, because it is the world-wide creation of the need for dollars through debt. It is also the territorial proliferation of international banking practices to supply national currencies to finance national governments and trans-national corporations as employers. In the context of the UK, Caroline Lucas MEP writes: Globalisation is

¨ when your local shop closes down because it can’t compete with multinationals out of town

¨ when you lose your job to cheaper labour in a poorer country – and globalisation will also be when they in turn lose their job to yet a cheaper location

¨ when Yorkshire’s last cloth cap producer moves to China

¨ the death of small farmers both in this country and in developing countries, who can no longer compete with global competition

¨ a downward spiral of labour standards, of environmental standards, of health and safety standards worldwide

¨ when poor people in developing countries grow food to export to the rich industrialised countries, rather than feeding their own people

¨ and globalisation is when the UK exports 263,000 tonnes of milk and cream, and imports 203,000 tonnes of – you guessed it – someone else’s milk and cream.

3.2 Does it mean anything different from an open and integrated world economy?

Yes, for an open and integrated world economy would not have campaigners in the streets at summit meetings because of widening gaps between rich and poor – nationally and internationally. Governments, businesses and people are all in debt. An ‘open and integrated economy’ would surely be just, sustainable, democratic and ‘wise’ such that it can last for more than one election cycle. Hence it is welcome that the House of Lords’ tradition of long-term and independent thinking applies itself to the Global Economy.

3.3 If so, what?

The difference is one of quality: economic globalisation has destructive effects on people and detrimental consequences on climate and environment. An open and integrated economy would get the balance right between governments and banks, between employers and employees and between rich and poor countries.

3.4 Is globalisation a new phenomenon or just a new label?

It is a new label for an old phenomenon that has become apparent thanks to the intelligence of computers and the technologies of communication: the structural and systemic flaws in the creation, supply and management of the money in circulation are exacerbated by the acceleration of financial transactions through technologies.

3.5 Should the main focus be what is called the real economy or the financial economy?

Before considering either, the creation and supply of money as currency ought to be such that compounding interest on the National Debt does not cripple public expenditure and make governments dependent on banks. Given the fact that an estimated 97% of all financial transactions are based on currency speculation and ‘financial instruments’ rather than the trade of real products or exchange of real services, it is paramount that the financial economy is given priority. The wide-spread support for the Tobin Tax is an indication for that need. In the ‘real economy’ money is a medium of exchange for real products, services and employment. In the ‘financial economy’, gold and currencies are a commodity without reference or standard. In the current situation of money creation and supply, the ‘real economy’ is a consequence of the financial one, not the other way round. Every war shows how the ‘real economy’ follows the financial one – which always finds enough money for war, but never for health, education or environment.

3.6 How does globalisation impact on the UK economy, and how does it impact on UK national and international policy making?

Mathematically speaking, globalisation accelerates all processes that are already exponential due to the exponential nature of compounding interest on interest: all increases grow faster and steeper, whether poverty, indebtedness and unemployment, or wealth and passive income from interest, dividends and rent. It depends on the length of the time periods considered, especially since the mentality of shareholder values does not encourage long-term thinking.

UK policy making, whether national or international, should be a wake up call to establish Sterling as a stable alternative to Dollar (especially since September 11) and Euro (especially since 70% of the population are against Euro for the UK) and thus set a model and precedent for an economy free from interest-bearing debts.

The devastating effects of ‘globalisation’ should spur UK policy making into a genuine ‘Third Way’: neither American nor Continental but wealth creating for the Commonwealth of Nations in the trading tradition of the British Empire. Through Stable Sterling this could be achieved in no time.

3.7 How does globalisation affect the major world economic institutions?

It puts more and more power into less and less institutions to employ people, own land and real estate and control capital while the rest goes hungry, homeless and unemployed – on a planet whose climate and environment are deteriorating.

3.8 Does globalisation require regulation and, if so, is this possible at the national level, or will the need for international regulation be reinforced?

The regulation of a national currency is up to a national government. The regulation of international currency trading is the purpose of the Tobin Tax: it soothes the effects but does not cure the cause of the symptoms.

Regulation comes after the event and is always too late. In the age of information and communication technologies, no regulation can prevent financial transactions. But currency trading can be curtailed and banks can be regulated against overcharging, ‘misselling’ and ‘bad lending’. Instead they should provide services such that ‘public confidence’ would not be an issue. Sustainable prevention would be better than curative regulation and the challenge is to create a stable currency whose supply is not artificially limited.

LETS (Local Exchange Trade System) provide such interest-free currencies for local communities. Barter companies create ‘trade pounds’ for businesses in the same way. Sterling could do it for the Commonwealth of Nations: provide a stable medium of exchange – free from interest-bearing debts.


4.0 The Detailed Questions:

4.1 What are the driving forces causing globalisation? Are they chiefly real or financial?

The need for money as a medium of exchange while it is also needed to pay interest on National Debts, corporate debts, personal loans and mortgages. The causes are of a financial or monetary nature, as they address the sovereignty to issue national currency, the mechanism to control the supply and the procedures to facilitate the repayment of debts.

The amount of dollars in circulation by far exceeds any other currency. The mechanisms for creating dollars as interest-bearing debt should be curtailed. This driving force can hardly be called either real or financial, but only ‘political’.

4.2 How are firms changing their business methods and the international location of their activities? What are the implications of any change?

The need to raise interest payments at government, corporate and personal levels creates a climate of perpetual competition in the search for cheaper and cheaper labour and the sale at cheaper and cheaper prices. Hence the business trend towards ‘cheaper’ countries with the accompanying trends of increasing exports and imports rather than local employment, local trade and local products.

4.3 Has globalisation affected goods and services differently?

Overproduction of food and unemployment in Western countries while the rest of the world is starving shows the undemocratic nature of the financial economy. Services are only required once basic needs for food and housing are met. Globalisation affects goods and services differently in different countries.

4.4 How is globalisation affecting employment (a) in the UK, (b) more generally in the advanced world, and (c) in the developing world? What are the implications for skill structure, job security and income distribution?

Globalisation does not only affect employment but also trade. Caroline Lucas MEP’s statements spell it out at the beginning. Portfolio skills, short-term jobs and increasing gaps between the employed and the unemployed are signs of employees trying to cope with increasing job insecurity and financial pressures. If there was enough money around for start-ups and small businesses, the unemployed could become self-employed and small businesses would not be made bankrupt so much or sell out to large companies and chains so much, often under financial pressure.

4.5 Who are the gainers and who are the losers?

The capitalist elite gains while everybody else loses – at the expense of the resources of our planet.

4.6 How will globalisation affect product market competition and consumer choice?
How dominant are the transnational corporations? Is their dominance growing?

Consumer choice is becoming irritating as in providers of energy, communication and Internet. Market competition for products is producing more and more surplus and less and less quality essentials such as food and health products.

Transnational corporations dominate over corner shops and their dominance must grow like exponential curves grow.

4.7 What is the connection between globalisation and the communications revolution?

More financial transactions can take place per time unit over short and long distances alike. All symptoms of the old phenomenon are becoming apparent and accentuated in shorter and shorter time intervals.

4.8 What is the connection between globalisation and labour mobility?

More and more 2nd and 3rd world workers are leaving their countries thus often taking with them essential skills, and the ‘1st world’ has to regulate foreigners while the 1st world population becomes older, sick and unemployed.

4.9 Does it matter to a nation who owns its companies, including UK banks and financial markets such as the London Stock Exchange?

National ownership means national pride and national accountability. Corporate ownership means corporate control. Corporate control means employing people for sustainable or unsustainable jobs and work that is satisfactory or not.

It would be a sign of remarkable progress towards economic democracy if the ownership and control of banks and financial markets were accountable to Parliament.

4.10 How significant is global banking? What role should the government play in determining the capital adequacy of international banks present in London?

Global banking is for humanity what blood circulation is for the individual body: the supply of the ‘oil’ between all parts. Capital adequacy needs a total re-think. Consideration should be given to 100% backing for all loans whilst taking current accounts off bank balance sheets. Current accounts should be treated like solicitors’ client accounts and totally protected. Government should ensure quality customer services by all banks. Instead of being allowed to ‘overcharge’ by £5bn (Cruickshank Report) banks should be charged with criminal offence when they steal from customers.

4.11 Are capital and money markets more interdependent than before? Are international capital flows too volatile? Is international financial instability increasing? Has market uncertainty increased?

Capital seeks to breed interest no matter at what cost and in which way. Whether from killing people with armaments or exploiting people as foreign labour. Share trading since September 11 has shown how making money out of money is not a stable way forward. Due to the easy expansion of debt based finance, capital flows are more volatile and markets more unstable and uncertain.

4.12 Is it important that individuals (and companies and pension funds) should be allowed unlimited access to international capital markets?

A meter is the same measure worldwide just as a second is the same everywhere. But the value of a dollar or a pound varies due to currency trading. Limiting currency speculation is one possible avenue, but again not getting to the cause of the problem. Britain could play a leading role in stabilising world markets if only the ‘real cause’ was addressed.

4.13 What UK government policy responses are required in areas including education and infrastructure investments, social safety nets, and the regulation of financial and other markets?

The UK government should be pro-active rather than responsive. It should issue interest-free money for health, education, transport and essential services and pay off the National Debt.

4.14 Bearing in mind the last of the broad questions listed above, what part should international organisations, such as the IMF, the World Bank, the WTO, play in the regulation of globalisation? Should their roles be changed in any respect?

Given the events of Seattle, Washington, Melbourne and Genoa as well as September 11, the IMF, World Bank and WTO should ask themselves why there is so much hate. These institutions should serve human needs and be made more accountable through all national governments.

In 1964 I came from Germany as an au pair girl to practise English and changed 12 DM in exchange for £1. Now the exchange rate is around 3 DM for £1. There is nothing more cruel than to devalue a nation’s currency instead of creating true wealth.

The British Government has a unique chance not to follow the American way of going global - with dollars and military force - but by making globalisation happen in the tradition of the British Empire of trading – with interest-free Sterling as a medium of exchange.

It is truly hoped that the House of Lords’ tradition for long-term and independent thinking will give not only adequate attention to this global phenomenon of citizens responding to a world in crisis, but also take the recommendations of the Forum for Stable Currencies seriously:

1. Keep Sterling parallel to Euro in the same way as the Ecu existed in parallel to European currencies – but for the benefit of the Commonwealth of Nations

2. Issue Sterling not by banks but by the State as interest-free M0.


5.0 Appendices:

5.1 The ABC’s of Finance Capitalism – David Korten – 


Association for the Taxation of Financial Transaction for the Aid of Citizens - 

5.4 STABLE STERLING Policy Recommendation by the Forum for Stable Currencies 

6.0 References:

6.1 The Globalisation of Poverty - Impacts of IMF and World Bank Reforms by Michel Chossudovsky. This book clearly documents how these financial mega-institutions have become a force of economic devastation. Out of print, but listed on 

6.2 The Growth Illusion by Richard Douthwaite. How economic growth has enriched the few, impoverished the many and endangered the planet. Available from 

Appendix 1: The ABC's of Finance Capitalism by David Korten

Appendix 2: HOW MALAYSIA GOT AWAY WITH IMF HERESY by Margaret Legum, Founder Member of SANE - South Africa New Economics

Appendix 3: Platform Statement by the Founder Signatories of ATTAC - Association for the Taxation of Financial Transaction for the Aid of Citizens

Appendix 4: Stable Sterling - A Policy Recommendation for Wealth Creation in the Commonwealth of Nations by the Forum for Stable Currencies 

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