MONETARY policy favours a “boom or bust” economy that could be improved through a Christian engagement in monetary reform, a report published this week has said.
The study Crumbling Foundations, by the think tank the Jubilee Centre, sets out a “biblical critique” of modern money.
It suggests that creation of “money through lending” contrasts with the Bible’s approach to debt where “taking out a loan was a last resort”, and profiting from lending is an “injustice” that takes advantage of the vulnerable.
The report also argues that government policy favours inflation because it “reduces debt in real terms” and that this opposes “biblical ideas for money” because it causes the non-payment of debt.
The policy of quantitative easing (QE), enacted by the Bank of England to stabilise the economy after the global financial crisis and the EU referendum vote, is also criticised. The policy involves the Bank’s printing money, which it uses to buy bonds, increasing the available funds in the financial system and encouraging lending.
The report argues that QE serves to increase wealth inequality, and that it should be “wound down as soon as possible”.
The author of the report, Guy Brandon, said: “Since the financial crisis we’ve seen monetary policy reaching the limits of what it can achieve. We have fewer and fewer options. QE, for example, was the least-worst response to a problem that never should have occurred in the first place.
“There is a growing recognition that ‘more of the same’ in terms of monetary policy is not going to work, so something more fundamental has to change.”
The study was released as the Governor of the Bank of England, Mark Carney, emphasised a need to “move towards more inclusive growth where everyone has a stake in globalisation”.
Mr Carney said that redistribution was needed to make free trade work for everyone, and that globalisation had become associated with “low wages, insecure employment, stateless corporations, and striking inequalities”.
He defended the use of QE, saying that after the financial crash, the Bank’s actions kept wages from falling by £2000 per worker.
The preface to the report, written by the executive director of the Jubilee Centre, Jonathan Tame, says that the Jubilee Centre was “convinced” that there was another banking crisis coming.
He hopes that the report will “help Christians, especially those working in the financial sector, to be better prepared with fair and effective policy responses when that crisis does come”.
The report can be bought from www.jubilee-centre.org for £5.