Only 15% of MPs were aware that new money is created when banks make loans, and existing money is destroyed when members of the public repay loans. 62% thought this was false, while 23% responded ‘don’t know’. Tory MPs seemed to have a slightly better idea, with 19% answering correctly, compared to only 5% of Labour MPs.
70% of MPs incorrectly believed that only the government has the authority to create all new money – including the electronic money in personal bank accounts – with only 23% knowing this to be false, and 6% answering ‘don’t know’. Labour performed slightly better on this question, with 29% of Labour MPs answering correctly, compared to 25% of Tory MPs.
Despite their confidence in telling the public that there is ‘no magic money tree’ to pay for vital services, politicians themselves are worryingly 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. Unfortunately, this privilege 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.
— source positivemoney.org by David Clarke 2017-10-28