Evidence and theory for how monetary collapse has been made inevitable

“At 8:30 p.m. on 23 March 2020, then British Prime Minister Boris Johnson announced a stay-at-home order effective immediately, backed up by the subsequent regulation three days later. The stated aim was to “flatten the curve” of the rate of infections. So, he launched the slogan “Stay Home, Protect the NHS, Save Lives” and said that the lockdown would be reviewed every three weeks. This was unprecedented and came as a surprise to the public. But a week earlier, on March 17th, the Governor of the Bank of England, Andrew Bailey wrote to the chancellor Rishi Sunak outlining a similarly unprecedented measure, which would direct tens of billions of pounds directly to large corporations:

“The new Covid-19 Corporate Financing Facility (CCFF) will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy. It will help businesses across a wide range of sectors to bridge across the economic disruption that is likely to be associated with Covid-19, supporting them in paying salaries, rents and suppliers, even while experiencing severe disruption to cashflows. The Bank will implement the facility on behalf of the Treasury and will put it into place as soon as possible.”

At the time the governor wrote this, business activity was still normal. Even if it had taken the prime minister a week to decide to lockdown, the official understanding at the time was that a lockdown would last only a few weeks. And while it was reasonable to expect limited economic disruption from a short lockdown, there were no indications that private financial markets wouldn’t have coped with it. Was the governor clairvoyant? If so, he would needed to have had the vision some months earlier, as it takes a long time for entirely novel funding mechanisms to be established. However, his clairvoyance didn’t stretch to seeing how the corporate recipients of his largess would use the funds. Within months, approximately 39% of CCFF participants had large-scale redundancies planned, totalling over 34,000 UK-based jobs. Of course, any businessperson knows that just because you can borrow money cheaply doesn’t mean you will spend it on wages of staff you don’t need for customers and income you don’t have. Frankly, the governor’s letter could convince only the most gullible people with zero business sense. Yet the media dutifully accepted illogical explanations and ran stories about the Bank of England’s sensible response to a crisis. But if the Bank of England was not really giving money to corporations for “supporting them in paying salaries”, what was it really doing?

To begin to answer that question one needs to understand how monetary systems function today, and how they are not only hastening the collapse of both natural and human systems, but are known to be on the verge of collapse by some senior officials…”

So that is how Chapter 2 begins, in my forthcoming book Breaking Together. I wrote it in October 2022 and because of current events I am releasing it ahead of the book’s publication, as a preprint:

“The evidence and theory for how monetary collapse has been made inevitable.” IFLAS Occasional Paper #11.

I do so because different commentators on recent bank collapses have been claiming it is because of reasons that fit with their political bias. But surely, they must know that when multiple banks collapse or are rescued, in multiple countries, it is because of a systemic cause. Even if the commentators present themselves as being on the side of ordinary folk, distracting us from the systemic cause protects the elites who pursued damaging policies.

In October last year I finished a draft chapter on a forthcoming financial collapse, providing clear evidence that it could arise from policies that were launched by some Central Banks with the excuse of responding to the pandemic. Their real reasons for doing so are open to speculation, but the policies have impoverished people due to higher inflation and are now triggering the transfer of huge sums to rich elites through various kinds of bailouts.

Mass media’s complete ignoring of the factual evidence that the novel Central Bank policies of corporate bond buying were prepared prior to lockdowns serves to undermine citizens’ awareness and dialogue about the likely geopolitical repositioning that is involved in recent monetary policy. That means the matter of long-term governance is hidden from the public and conducted by coalitions of elites from public and private sectors. Anyone who seriously cares about sovereignty, rights, democracy and good governance should overcome their fear of awkward emotions and others’ reactions, to look closer at what has been happening in global finance.

If you are wondering what to do about this information apart from feeling uneasy: please write to economics journalists and ask them:

a) if they did not assess the timing of monetary decisions in March 2020, can they do that now as a way of determining whether the pandemic was used as an excuse?

b) if they have been ignoring the role of that monetary policy in creating the subsequent inflation and banking crisis, then can they address that more in future?

Abstract for the paper:

This paper is a preprint of a chapter in the forthcoming book Breaking Together (Bendell, 2023). It provides evidence on the chronology of decisions by monetary authorities since the start of the pandemic in 2020 which contradicts some of the official explanations. Instead, by following the use of the funds made available by Central Banks, the possibility that the policy was to enable a neo-colonial acquisition of foreign assets by corporations is explained. The impact on inflation is noted, as well as the way certain corporations benefited in unprecedented, anti-competitive, and environmentally inappropriate ways. The author offers personal reflections on how an unusually risky monetary policy might imply that certain parts of the financial establishment are preparing for the possibility of a transition to new monetary arrangements – perhaps even a scheduled collapse. That might be because of their awareness of the fundamental unsustainability of the existing expansionist monetary system.

Preface to the paper:

Some people have characterised the period of the pandemic and associated policies like being at war. If that is not mere hyperbole, then unfortunately the adage that truth is the first casualty of war applies. The public have not been receiving data-focused reportage. Instead, there has been a paternalistic narrative-controlling mass media versus an often sensationalist independent media. In the bifurcation of narratives into a fraudulent orthodoxy on the one hand and a lurid backlash on the other, informed analysis of the decisions of elites is hidden. Public dialogue degrades into trying to prove that one’s existing ideas and worldview are better than that of an ‘opponent’. Although independent media might be closer to the truth on a lot of issues, they are not sufficiently resourced nor have a depth of analysis to escape reactionary framings or even being manipulated to distract the public. This is the case with commentary on financial issues, where the base level of understanding is limited.

The presentation of the sequence of decisions of monetary authorities since early 2020, and how the money was then used, had not been reported before the release of this chapter as a preprint. Therefore, that sequence has not been compared to the rationales that were offered to politicians, media and the public. That means an informed discussion of the performance and accountability of officials in different sectors of society is lacking. In this chapter I avoid both the fraudulent mainstream narrative and the sensationalist counter narratives on pandemic policies to invite attention to what demonstrably occurred, the damage done to our cost of living, and, by following the money, offering some thoughts on what some of the objectives of some officials might have been.

If, or when, people disagree with such thoughts on the objectives involved, I wish to invite other serious ways of explaining the sequence of events, use of the funds, and the foreseen inflationary harm to citizens of the relevant currency zones.

I finished this chapter/paper in October 2022 and released it ahead of the book’s publication, due to events at the time.

Professor Jem Bendell

Andrew Medhurst, former investment banker, and finance lead for Extinction Rebellion invites attention to the ideas in the paper.

“Most professional economists don’t grapple with the crucial role of banking in shaping the economy, politics and society. Most finance journalists don’t dig deeper into what geopolitics is happening behind the scenes. Whether close to banking or not, the rest of us know that something is seriously wrong, and increasingly illegitimate about how the financial systems work. Oddly, perhaps, it takes a research analyst from sociology, to shine a light on what has been happening. In this paper, a preprint of a chapter in his forthcoming book, Professor Jem Bendell points to what was happening behind the headlines of the pandemic, and more recently, in the financial markets. It means that any of us who care about the environment, society, sovereignty, or even free enterprise, need to organise to better understand money and banking, and prioritise it in our political engagement.”