28th June 2018

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We are informed the Government is considering changing its paper currency in order to combat corruption, in a similar manner as was done by India recently.

Whilst the subject of national currency is being discussed, Movement for Monetary Justice, an NGO dedicated to Reform of the Monetary System for the better wellbeing of the people, feels the time is now opportune for the Nation to consider a Reform of its Monetary System.

A Reform that will remove insidious inflation causing amongst others high food and rocketing house prices, reverse a persistently widening poverty gap, increase economic output, remove unemployment of youth and graduates, apart from addressing other more international monetary concerns.

Unbeknownst to many today, we, like all other countries in this world have outsourced Money Creation to the Private Sector. Whilst we believe that our money is created wholly by our Central Bank, in reality, they only create 5% of the nation’s money supply. 95% of our money we have outsourced to be created by the Private Sector. When this section of the Private Sector creates money it does not take into account public concerns like inflation and employment; it is motivated primarily by private profit which has worked to the detriment of public concerns as listed above.

Who is the Private Sector in this country that creates 95% of our money?

The answer is the Banks. Banks create new money every time they give out loans or financing. This phenomenon of banks creating new money when they give out loans (or financing) is proven and confirmed no less than by the Bank of England, The Federal Reserve and the European Central Bank.

And this creation of money by the Banks motivated purely by their private profit concerns has resulted in the list of anomalies listed above i.e. insidious inflation resulting amongst others in high food and rocketing house prices, a persistently widening poverty gap – the rich getting richer and the poor getting poorer, an SME sector not favoured in financing resulting in significant loss in economic output and high youth and graduates unemployment.

In studies done in for example the UK, we find the following statistics which is reflective in most countries in the world. The banking sector only funds 16% of the real economy- 84% of bank loans are for housing, commercial property and the financial sector.

Hence when the sector given the responsibility to create money do not channel it to the real economy, new goods and services are not created by this new money. The end result amongst others is general and bubble inflation. Hence the general inflation of food prices and living costs, and bubble inflation for houses and property.

Another anomaly in the world today is that only 15% of bank loans go to the SME Sector which on average creates 80% of employment in most nations. This results in much youth and graduate unemployment throughout the world whilst a higher capacity of economic output is denied when the SME sector is not properly funded.

Locally, in statistics given by Jabatan Statistik Malaysia in 2005, and which survey appears not to have been repeated since, the banking sector only provides 15% of SME funding needs. Out of this 15%, only 3% were from Development Financial Institutions, of which the SME Bank is one of them.

The Banking sector demonization of the word risk has also contributed to the non-funding of the SME sector and the subsequent high unemployment among graduates and youth. If pressed, why banks are reluctant to lend to the SME sector, the usual answer is the risk, and that the SMEs do not have adequate capital and collateral. Movement for Monetary Justice believes this is only true if the banks confine itself to lending.

The problem of risk, inadequate capital or collateral, Movement for Monetary Justice believes will be removed, if in a radical reform the banks are willing to make a paradigm shift to move from lending to equity investing in SMEs. For the sake of reference we note in Islamic Muamalat the key legal maxim, currently ignored, is Alghunm bi Alghurm ie Rewards comes with Risk.

The problem of risk will be solved if the banks have adequate officers to closely monitor all SMEs they invest in. The problem of the wage costs of these investment officers will be solved if they are paid on an allowance plus profit sharing basis.

As to where to source these officers from, our army of unemployed graduates will provide the manpower.

As for training them to be Investment Officers a nation-building Special Training Academy at Universities can easily be set up, with professional and former entrepreneurs as lecturers.

This solution will not only create jobs for unemployed graduates it will spur new job creation and economic output spurred by this increased funding of the SME sector.

Movement for Monetary Justice has the detailed Proposal to implement this Nation Building Project.

If banks are bad creators of money, and the current system delivers inflation and widening poverty gap amongst others, what is the Solution?

Movement for Monetary Justice have the detailed Monetary Reform Solution to remove insidious inflation, to reverse a persistently widening poverty gap, to increase economic output, to remove unemployment of youth and graduates, and also to address other more international monetary concerns.

We humbly request to be of service to the Nation.

Movement for Monetary Justice Secretariat,
Kuala Lumpur.

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Did you know that paper notes and coins form only 3% of a nation’s money supply?

Did you know that there are now 200,000 unemployed graduates in Malaysia? Did you know that the main cause of this is the debt based banking system that we are practicing?

Did you know that 97% of a nation’s money supply are created by banks out of thin air?

Did you know that 80 billionaires own half of the planet’s wealth and 1 billion people lives on less than 1 USD per day?

Did you know that the current monetary system steals purchasing power from the poor making them poorer and the rich richer?

Did you know that debt based banking system whether Islamic or conventional, denies funding to the SME Sector, which creates 80% of jobs in any nation? 

Did you know that the number of people living in poverty increased by 100 million during a period when world income increased by 2.5% per annum

Did you know that Banks funds on average only 16% of the funding needs of SME’s of which Development Financial Institutions including Specialist SME banks, funds only 3% of SME needs!” “SME’s on average contributes 60% of a nation’s GDP”

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The problem is an unending increase in prices that steals away the purchasing power from our pockets. The price of food...

…that hurts the poor, students and almost all Malaysian households. Prices of homes that puts houses in the category of a luxury instead of a necessity, an item that can now only be owned by the few and by those with a legacy, or well to do parents instead of by everyone.

Prices of cars – what was the price of luxury cars in the past are now the prices of a basic car.

These prices are not compensated by a similar increase in salary and income; the prices increased in runaway fashion, while increases in salary and wages are pedantic and abysmal. We now have ‘sandwich families’ with grandpa, son and child in the same house, as the son can no longer afford to go out and buy a house.

In the city we have working homeless, young people working but wages too low they sleep homeless. We have students who eat only once a day, at 3 pm because they can only afford one meal a day. These are all the results of the theft of purchasing power done insidiously by our money system not understood by many, and not understood by those who can make changes.

Almost certainly retail based taxes add to the burden of the poor and to the burden of all but the message we are trying to pass is that this is a systemic problem- the problem exists because it is inbuilt in the money system we adopt, and retail taxes such as GST are just additional burdens, not the sole cause.

Those are the problem for people with jobs and income. We also have hundreds of thousands of unemployed graduates and youth, as in all countries throughout the world, courtesy of a unintelligent debt based banking system, and general gross miseducation at schools and universities.

A change in the monetary system will not only remove inflation, it will also remove unemployment, and will increase economic growth for the nation.

We can also be an example to be emulated throughout the world.

But we need you to hear us out and support us, and we need the powers that be to implement what we point out.

A journey of thousand miles begins with the first step.



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