Tony Perridge: Austerity economics is lunacy – independence with a sovereign currency can offer an escape route

Ben Wray

Tony Perridge, CommonSpace reader from Inverness, offers his vision for a post-austerity, currency-sovereign independent Scotland to our special week of coverage on Breaking the Bankruptocracy. Email if you would like to offer your thoughts 10 years since the crash.

THE lunacy of Tory austerity economics was brought home to me via some interesting statistics. When bombarded with figures for the national debt, balance of payments and the like, we are inclined to lose perspective with these numbers. Quoting millions, billions and trillions, figures that involve so many noughts behind them, are meaningless. So, to simplify matters, let’s relate these figures to time intervals.

A million seconds is approximately 11 days. A billion seconds is approximately 32 years. However, a trillion seconds is 32,000 years. This starts to give us some idea of how pointless the austerity campaign is.

The UK national Debt is £1.8 trillion. Now, apart from a couple of fluke years in the mid-nineties when oil revenues and the selling-off of state owned industries distorted the figures, the last time that the UK had a balance of trade surplus was in 1982. Since 1950, the largest annual trade surplus has been a little over £8 billion. If we look on the optimistic side and say from our current trade deficit of £47 billion, the Westminster government’s wonderful fiscal programme of sweeping austerity results in a surplus of £10 billion per anum, (we’re already stretching credibility to it’s limits here), then it will take 180 years to pay off the National Debt. Put another way, that is six generations of humanity, all beavering away in support of a failed political ideal.

So, it is clear that the National Debt can never be cleared and neither would the private banks, from which it is borrowed, wish it to be.  Of course, the banks never had the money to lend in the first place, as is now widely known; they merely created it in the form of computer entries. If it is repaid, then they couldn’t charge interest on it because the money disappears back into the ether from whence it came. I remember David Cameron urging everyone to pay off their credit card debt, obviously unaware that that would massively reduce the money supply and throw the country into chaos. Nice one, Dave. 

Another mythical fiscal figure is GDP. Much quoted as a measure of performance, it is totally meaningless in real life. The price of a haircut, a face-lift or a car crash all add to GDP and represent nothing. The only figures that represent true wealth for a country are those that show whether we produce enough exports to pay for our imports. Since the Thatcher era, our manufacturing sector has been eviscerated and starved of investment, with the emphasis now on the financial sector, the very sector that has wrecked our economy. 

The core of the whole problem rests with the money supply. Unless we remove from the banking industry the ability to issue 98 per cent of the country’s currency in the form of debt, abolish fractional reserve banking and return the issuing of money to the State, then we are cursed to suffer eternal austerity. Since the State and the financial sector are hand-in-glove, this isn’t going to happen because the present fiscal system is too well entrenched.

READ MORE – 10 years since the crash: Where did banking go wrong, and how do we fix it?

The only way that we can extricate ourselves from this situation is for Scotland to become independent. Then we can establish our own constitutional currency, issued by the Scottish State and spent into the economy in the form of infrastructure and investment. No longer will we need to trust in discredited  “trickle down” wealth distribution. Banks would only be able to lend money that had been deposited by customers. No bank would therefore become too big to fail. 

The Scottish currency, issued only by the State bank, would be only legal tender in Scotland and so would not be available to foreign speculators. For too long we, the gullible public, have acted as unwitting guarantors for the casino banking industry. With the clean slate of independence, we have the opportunity to establish a more equal society with the national interest, not the banking shareholders, paramount.

Sadly, the Growth Commission’s fiscal plans will merely maintain the private banks’ hold on the economy. We have one opportunity, at the point of independence, when we can establish a constitutional currency. No other course is either sensible or desirable. 

Picture courtesy of Howard Lake

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