News comes of a huge class action suit brought in Canada by a litigator called John Dempsey. Following on from John Kutyn’s (a Canadian living in NZ) paper “the Nature of Money” it takes the next step of actually calling banks to account under the law.

It’s being held up in the courts but at some point the suit must be acknowledged and heard. Its a tough one for the judges as they are being asked to rule on one of the most accepted practices in society today, namely the equivalence of “digital money” and cash in the form of notes and coins.

With the relentless advance of Peer to Peer lending systems coming online and complimentary currencies in every country it is easy to see how a major change is underway. Sure the banks may not be too concerned now but we are seeing the beginnings of a major revolution in what we know as money.

The recent Bank of England action is completely necessary though wrong in terms of moral hazard. In order to understand why this is the case i exhort you to read John Tomlinson’s paper which is in the research section or here. In his paper  he explains how a bank works in terms of taking in deposits and lending out money. He dissects carefully the balance sheet of Barclays Bank and shows how solvency is merely a trick of the imagination.

Of course readers of this blog will already know that money is merely a ficition, one with a deep and dark history. As Trevor commented in the previous post, the general public relies on he integrity of the system and the honesty of those who operate it.

Can we have confidence in those people? I think not. Not because they are dishonest  but because they refuse to acknowledge a system that is unstabl, inequitable and ultimately inefficient.

Please read and ask questions, comment, spread the word and ponder.  What does your money mean? Do you really have any savings, wealth or assets? Don’t rely on the system to support you. It has failed regularly since the Bank of England was first formed and wil l continue to do so until some serious surgery has been performed.

I just heard this news an hour ago and frankly was astounded. The Bank of England will ,if necessary, guarantee all deposits held with Northern Rock. This a major change to the current depositors insurance scheme.

Wow! In a stroke they have just removed any risk from the banking system. They have in effect nationalised Northern Rock without actually doing so.

Actually this is a good thing since it further exposes the myth behind our banking system. Mind you they didn’t rush to bail out the depositors of BCCI  when that failed.

So where to from here? Well that’s anyones guess but this wont finish here even with the  blank cheque provided the the Old Lady.

Max Hastings writes a lovely piece here. Finally as the party comes to an end and the hangover kicks in, will there be some reason?

I hope so. It is a great opportunity to look closely at the money system we currently have. Do not look to our central bankers to provide the lead or even our politicians. We the people will have to provide ideas, answers and solutions on how to proceed. The monetary reform movement has been growing by the day and now it is time to stand up and be heard.

I’m in Europe for a month, making my first trip back since heading to live in NZ nearly 6 years ago. Currently i’m having a lovely time in Southern Spain in a pretty little village called Benahavis.

Watching the UK news is so different: small soundbites, nothing too deep and its making me dizzy. But not as dizzy as those pictures of people queuing up at their local Northern Rock to get all their money out.

They seem so calm about it without quite realising the ramifications of their actions. A run on a major bank in the UK? Who would have thought it could happen in the modern well regulated era.

We have seen finance companies in NZ topple over like dominoes but the general public has taken the view that they were accidents waiting to happen and that people should have taken more care in what they were investing in. But a major financial institution would be a different story.

For money reformers the recent credit crisis was inevitable, a product of the incessant growth in the global money supply. How it will play out is anyone’s guess but there has never been a better time to expose the weakness and corruption at the heart of our money systems.

In the meantime people should check to make sure they do not have to much exposure to any single financial entity. What is amazing to me is how the stock markets have proved so resilient. There is lots of talk about the strength of the underlying economy but the effects of these recent months will take a long time to feed through.

I have a feeling this story has a long way to go.

Kiva has been a remarkable success story and one which could really change the way we spread our hard earned around. Charity has always been a core value for humanity as a way of expressing gratitude for what we have and compassion for those who don’t.

But Kiva is not a charity it is a lending organisation with a difference: they don’t charge interest on their loans. So in effect you are donating money but you get it back!

This changes the dynamic from charity to help.  I love this  approach. I made a deposit of $1000 about 6 months ago and lent money to 15 different people all over the world and so far 2 loans have fully repaid whilst the total amount lent is $1075 and repaid $595 (you only get fully repaid when whole loan is paid up).

What is exciting is helping out so many people but as help rather than charity. There is no interest, which as you know from previous posts is the cause of all human suffering.

I am also keen to see how far that $1000 can go because as soon as loans are fully repaid you can lend out again.

Try it out….its a great experience.

I’ve been following the spread of microfinance for a while and have been getting involved with Kiva which has been a great experience. I have also noted the rise of social lending businesses such as Zopa, Prosper and even Facebook. Jason has written a good piece on the rise of new forms of financing.

What interest me further is whether all finance can move to a P2P platform and seriously eat into the major lending markets currently controlled by the commercial banks.

I think it could do. This crosses the web with money and complimentary currencies.

Remember that anyone can create “money” if they really want, it just can’t be in the form of bank notes issued by the Reserve Bank. Commercial banks create bank loans by a simple bookkeeping entry. Only 2% of the money supply in NZ is in the form of notes and coin so banks don’t actually hold any money other than a bit of cash.

My point is that P2P finance could take off in a very big way once we get the hang of it. My guess is that the firms currently involved don’t realise how big this could be.

Expect the central banks to cast their beady eyes over these operations once they get a roll on. For now it’s just some web bizness but this feels like 1694 all over again.