Comment: Currency change can save masses from ‘reckless officialdom’

Persistent inflation has been the ultimate stealth tax, now it is time we handed power to the people.

By Douglas Carswell MP

What do you remember about the year 1989?

Margaret Thatcher in Downing Street? The Stone Roses and Nirvana in the charts?

One thing you might not immediately recall about Britain 22 years ago is that £1 was worth approximate twice what it is today.

The cumulative effect of inflation in the intervening years has eroded the currency – and by extension the value of both debts and savings. This in turn has encouraged people to over-borrow and under-save. Small wonder that economic growth has been based on over consumption and too little production. Persistent inflation has transferred enormous wealth from the private to the public sector. It has been the ultimate stealth tax.

Today I introduced a bill that aims to stop this. My ten minute rule bill on currency competition seeks to amend the 1954 Banknote and Currency Act to make a basket of competing currencies legal tender in the UK.

Under my proposal, pounds sterling will still be our national currency, issued by the Bank of England. If you want to, you can carry on as you do today.

This proposal does not force anyone to buy or sell to someone on terms that are not freely agreed to by both parties. If you are not happy using a currency that is set to halve in value over the next 14 years, however, my proposal would allow you to do something about it.

This is not about scrapping the pound; the Bank of England will keep issuing pounds as it does today.

Nor is this some cunning scheme to adopt the Euro. I've fought three general elections pledged never to sign up to the Euro and I've even gone so far as to oppose EU membership all my adult life. Far from wanting to join a single currency, my proposal is that we scrap the idea of there being one single currency at all.

Families wanting to plan their financial future can do so using currencies that aren't systematically shrunk in order to allow government to grow. Businesses wanting to protect themselves against rising prices could use money that wasn't diminished so that reckless officialdom can try to magic away its debts.

At the click of a mouse, we are all able to shop around for books, music and financial services. The internet also allows us to use multiple currencies easily and seamlessly. Objecting to the use of different kinds of cash on the grounds it is too complicated is a bit like suggesting we should only have one channel on the television because it is too complicated to switch channels. Both can be done at the touch of a button.

The Bank of England might keep on mismanaging the money supply. Indeed, there is more talk of yet further quantitative easing. But if the Bank of England persists in devaluing their currency, under my proposal, they would no longer be eroding the value of ours (which, incidentally, might help impose on them the kind of monetary discipline they've never quite had).

"This is bonkers" a certain type of reader might reply. "Completely off the wall". Hardly. It was the policy of the Conservative government in 1989.

You remember that? It had won elections with handsome majorities and was not afraid to be bold and radical as it set the market free and lifted us off our knees.

Douglas Carswell has been Conservative MP for Clacton (originally Harwich prior to boundary changes) since 2005.

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