“Mr Douglas Carswell (Clacton) (Con): I beg to move,I don't hold out much hope it will pass in the United Kingdom, nor do I think the politicians of New Zealand likely to pass such a wise law. Nevertheless, the end of fractional reserve banking would stop the non-productive class extracting wealth from the productive class while they simultaneously retard economic growth.
“That leave be given to bring in a Bill to prohibit banks and building societies lending on the basis of demand deposits without the permission of the account holder; and for connected purposes.
Clayton makes an eminently sensible observation in his speech
Since the credit crunch hit us, an endless succession of economists, most of whom did not see it coming, have popped up on our TV screens to explain its causes with great authority. Most have tended to see the lack of credit as the problem, rather than as a symptom. Perhaps we should instead begin to listen to those economists who saw the credit glut that preceded the crash as the problem. The Cobden Centre, the Ludwig von Mises Institute and Huerta de Soto all grasped that the overproduction of bogus candy-floss credit before the crunch gave rise to it. It is time to take seriously their ideas on honest money and sound banking.The politicians continue to listen to economists who did not see this coming, yet suggest a solution that costs obscene amounts of money, and the failure of the solution is already being seen. It would seem wiser to pay attention to those who predicted the collapse, especially when they are all singing a similar tune.
The Keynesian-monetarist economists might recoil in horror at the idea, because their orthodoxy holds that without these legal privileges for banks, there would be insufficient credit. They say that the oil that keeps the engine of capitalism working would dry up and the machine would grind to a halt, but that is not so. Under my Bill, credit would still exist but it would be credit backed by savings. In other words, it would be credit that could fuel an expansion in economic capacity that was commensurate with savings or deferred consumption. It would be, to use the cliché of our day, sustainable.