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Letting it all hang out
in Anstruther
Photograph by
Islay McLeod

The SR archive



18 June 2013

Scotland needs to
escape from the
chains of sterling

Ronnie Morrison

Everyone today is paid by credit transfer – an electronic 'bit' which can be changed into paper money at the bank's ATM. It is more convenient, although perhaps less reassuring, than being handed a solid gold coin made and issued by the government mint.

In the course of adopting this technology the banking industry has, almost unnoticed, acquired the power of creating the national currency from the state. The state used to mint the coins and lend them to the banks for distribution to citizens under rules of responsibility and moral hazard. Today the roles are reversed and the state is in debt to the banking system and labouring under an unsustainable national debt.

Could it be different in an independent Scotland? Could we tighten up bank regulation if we retained sterling? Would we have any say at the Bank of England?

Financial transactions have become much more convenient but the price paid is an international banking monopoly which is accountable to no democratic authority. Most politicians and civil servants know this but appear powerless to intervene and many senior members of government and members of the 'establishment' find it financially beneficial to condone rather than condemn the status quo.

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.

Consider now the foundation in logic of our banking arrangements. The most successful crimes are those no one knows about. They tend to be small fry and non-violent. Fraud is a good crime in this respect because even if it is discovered it is notoriously difficult to prove in court, and although it starts out small it has unlimited potential.

The perfect fraud is ambitious and requires the selection of a 'mark' holding political power and who can become unwittingly embroiled. This ploy ensures that if the scheme misfires it will be covered up and if it succeeds it can become institutionalised into the structure of political power. It thus perpetuates itself to the benefit of all its heirs and successors. In short, it becomes legitimate under the laws of the land.

That is where we are now, a complex inverted pyramid balanced precariously on its point and becoming ever bigger and taller. We know it will collapse but not when; we know that it is destroying us but propping it up seems better than picking up the pieces.

We also know that if we had the opportunity to start again we would not make the same mistake again, and here we in Scotland find ourselves, almost unique in the western world, with a chance to start from scratch. We could have an independent currency and we could fix our exchange rates and we could maintain our balance of payments and change our priorities to full employment. Instead of playing futile games in financial markets we could have a well-regulated mutual banking system which served the community rather than exploiting it. We know how, but can the Scots be persuaded to rescue themselves?

We can have all the convenience of modern banking with all the advantages of financing our industry and public services, but not if we remain chained to sterling and the malign alchemy of financial markets. These are institutionalised frauds which suck the lifeblood out of the economy which hosts them. They are approaching the endgame and it's time to think for ourselves, and get out as quickly and decently as possible.

Ronnie Morrison trained as a chartered accountant and has now retired from founding several businesses in manufacturing and construction in the UK and abroad