Astonishing Coincidence 125

By an amazing accident of timing, the Westminster Select Committee on British Affairs has today published a report saying Scotland will have no currency at independence and may have to barter. The Committee consists of Conservative, New Labour and Lib Dem MPs.

The Scottish Sun has run the currency scare on the front page for the last three days. Labour, Lib Dem and Tory leaders all asked nothing else at First Minister’s questions yesterday. The media and Holyrood frenzy could have been sparked as reaction to the TV debate. But what the publication of the Westminster report today shows is that this massive currency scare has all been pre-planned by Tory, Lab and Lib-Dems with heir media allies for some time. This is their big push keep Scotland’s resources.

What is increasingly plain – and I warned before the debate – is that the conduct of the entire “debate” was a part of this co-ordinated plan, pre-determined to allow the media to declare the currency issue is the only one that will decide the referendum. Salmond was grilled on nothing but currency for twelve minutes, and then the chairman picked out members of the public from the IPSOS/Mori selected audience pre-primed with questions about … currency.

Audience members had had to fill out forms for selection indication if they were Yes or No voters. They were then asked again at the door, and many Yes voters who had been invited were excluded. No voters were seated in a selected central area where the questions were taken from. Better Together staff were present briefing their questioners.

This really is a major test of the power of the mainstream media. There is no currency question. A very large majority of the countries in the world became independent in the last seventy years. Countries with far weaker economies than Scotland
support their own currencies. I have personally in travelling had at least 40 different currencies in my pocket. All over the world, what matters is not the unit of denomination, but how the money is distributed and used.

Scotland like Denmark could have its own currency. It could keep the pound either in a formal currency union or not. It could join the euro. As an independent country it will have the choice – and if the English want to burn the choice of formal currency union, that will not sink Scotland by any means.

Currency is not the be all and end all of independence. But what we have is a concerted effort by the Westminster politicians and the entire media to convince people that it is. Will this work? Or will they stand against the raw aggression and hatred now pouring out from the British nationalist camp?

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125 thoughts on “Astonishing Coincidence

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  • windsock

    I read your blog on a regular basis because sometimes you can be quite perspicacious and give me an insight that night never have occurred to me. This is especially true of pieces relating to your time in the Foreign Office.

    But on Scotland – please, cut the chest beating monomaia. If Scotland means that much to you, why are you living in Ramsgate (presuming you haven’t re-located to get a vote, of course, in which case I stand corrected)?

  • Mark Hearne

    Scotland could of course set up a new digital currency along the lines of bitcoin,with a partner like Google or Amazon. The pound is going to collapse eventually under the weight of debt.

  • MJ

    “this massive currency scare has all been pre-planned by Tory, Lab and Lib-Dems”

    True. They’ve dug a big hole for the SNP to fall into. It’s fair enough though. A UK independent of Scotland is under no obligation to enter into currency unions with foreign powers. They gave you lots of notice. They’ve even rigged up floodlights so you don’t accidentally fall into it at night.

    Salmond’s response however has been to put on a blindfold and keep on marching towards that hole.

  • Salford Lad

    A country cannot be truly free, independent and sovereign, unless it has the power to issue its own currency.
    It cannot control its economy to create employment , generate taxes and support social infrastructure.
    Many people are confused about money. Money is not wealth, it can lose its value overnight by hyperinflation.
    It is a means of exchange , a token. A tool to enable smooth operation of trade and industry. The Govt gives it value because it accepts it as taxes and enforces its use by the power of its laws.
    The wealth of a country is in its natural resources,which includes the ingenuity of its people to exploit those resources and create real wealth from agricultural land, water, forestry, minerals/oil/gas, fisheries, manufacturing etc.
    To exploit these resources a Govt can kickstart an industry by issuing a grant of money. The successful business will generate employment and wealth. The repayment of the granted money is returned in the form of tax, both from the workers and corporation. Thus the issued granted money is returned and cancelled, the wealth from labour and production remains.
    The US dollar is a fiat currency (as is the pound sterling, the euro and most other major currencies). This means, it is monopoly money. There is no gold reserve that its values are pegged to. It is simply made up. So how does money get made? A private, for profit central bank prints it and lends it to the government (or other banks) at an interest rate. So the Central Bank prints £100, and gives it to the government on the basis that it returns £101. You may have already spotted the first flaw in this process. The additional £1 can only ever come from the Central Bank. There is never enough money. The second issue is that all money is debt.
    This used to be the way pretty much all of the money in circulation came to be. That is, until Investment and Retail Banks got tired of the Central banks monopoly on debt based currency, and kicked off the commercial money supply. You might assume that when you take out a loan or other form of credit, a bank gives you that money from its deposit reserves, and you then pay back that loan to the Bank at a given interest rate – the Bank making its profit on the interest rate. You would be dead wrong. The Bank simply creates that loan on a computer screen.
    Let’s say you are granted a loan for £100,000. The moment that loan is approved and £100k is entered on the computer – that promise from you to the bank creates £100k for the bank, in that instant. This ledger entry alone creates the £100k, from nothing. Today, over 97% of all money that exists, is made this way. It is digital money no different from the credit on a bank credit card.
    This is what drove the dodgy lending practises that created the last crisis in 2008. But since then, the failure to regulate the markets means that while bailouts hit public services and the real economy – banks were free to continue the same behaviour, bringing the next crash. They were also issued with free ‘play money’ as in Quantitative Easing to the tune of £345 bilion.
    Govt have ceded control of 97% of the money supply to the private banking system, who invest mainly in the Financial casino sector , Insurance and real estate. This creates little employment and zero wealth, but does create mega amounts of more digital money ,leading to inflation as evident in London.
    Scotland will never be really free until its future Govt takes control of its own money creation by issuing its own currency.

  • Howard Kennedy

    Personally I say let them keep sniping. Come independence, when they have to find a way to get out of the corner Darling has painted them into on currency union, say: “No it’s ok, you made it clear you don’t want a currency union, so we’ll float our own currency and you can keep the debt, cheerio!” The initial costs to Scotland would be higher but the medium and long term flexibility and stability would be better. In the meantime, the armageddon Westminster fears for their privilege based system would come to fruition. I know this would be harsh on the people of England, who have no idea just what a dangerous game of brinkmanship their representatives are playing with their economy but they did, after all, elect the plonkers.

  • Republicofscotland

    What’s more frightening than the “Pound fiasco” as we all know a currency union will happen, is the sheer and downright lies that Westminster is prepared to say, in order to obtain a no vote. We’ve all suspected for years,that Westminster has been lying through its teeth on many topics and policies, the last two years have for most Scots been an eye opener on a truly massive scale. Not only has Westminster lied they’ve been backed to the hilt by the unionist press and tv channels, and now they’ve been found wanting by Scots.

    O/T. Craig I do apologise.

    Another Labour councillor sees the light, Stephen Dornan, says, “The only way to protect the NHS in Scotland is to vote YES.

  • Leslie

    “There is no currency question.” Claptrap.
    You’re hot on paranoia, but not so forthcoming on the idiocy of the SNP not to have sorted this issue long before now. Why has the SNP walked into the trap? Salmond’s language of ‘buff’ – more at home in a poker game – is fatal in this context. He merely looks ridiculous and evasive.

  • Rod C

    Salford Lad – you may be reposting it – but there’s some big holes in the argument.

    A history of the £ sterling since WW2…. formal currency union, informal currency union (twice), formal currency union, fully traded currency in 1999. So were we not independent pre-1999 or are they talking utter nonsense?

    History of Sterling….. (credt to Union Kon 2 – a commenter on the Scotsman online)

    1947-1971 – The pound was in a formal currency union with the US dollar in a fixed exchange rate known as the Bretton Woods system. In effect, the UK used the dollar and did not have an independent monetary system. This period is remembered for a long trend of economic growth, albeit not directly related to currency management.

    1971 – After Nixon ended Bretton Woods so that he could pay for Vietnam, the GBP moved to a floating exchange rate with the USD similar to the way that Denmark is pegged to the euro today. In the same year, Decimalisation was introduced. This re-denomination remains the most drastic and noticable change in money handling that the British public has seen in living memory. Only limited control of the pound is possible.

    1976 – Economic turmoil results in the UK asking the IMF for a bailout loan. One of the conditions of the loan is tighter management of the currency peg.

    1979 – 1986 – Thatcher’s government adopts monetarist policies involving loosening but not abandoning the informal peg with the USD.

    1986 – The Louvre Accord. Thatcher’s government agrees to change the benchmark of the currency peg from the USD to the German Deutsche Mark. The UK still does not have an “independent currency”.

    1990 – John Major’s government signs a formal currency union taking the pound into the Exchange Rate Mechanism, the forerunner to the euro.

    1992 – Black Wednesday. The pound is taken out of the ERM, not because of any failure of the Mechanism itself but because currency speculators, encouraged under Thatcher’s policies of the ’80’s, realised that they could make a quick buck by crashing the system. George Soros infamously made himself £1 billion by this move. The pound is now “independent” of any other currency though still partially pegged to gold and silver. The Treasury estimates that the move cost British taxpayers around £3.3 billion.

    1999 – Gordon Brown announces in advance that he’ll sell the UK’s remaining gold reserves and buy euros. Traders short the value of gold and drive it to a near historical low price. By 2002 the move is completed and the UK, for the first time ever, has a fully, freely traded and independent currency.

    You’ll notice all of the options on this list: Formal Currency Union, Informal currency union, fixed peg, floating peg, mixed basket peg and freely floating.

    All of these options are currently on the table for Scotland’s currency choice post independence. The UK has actively used all of them in the last 60 years. I don’t recall at any time the UK declaring that it was no longer an independent country.

  • paul

    The only real currency question is:
    ‘Will this irrelevant and ill understood topic confuse and frighten the electorate?’.
    Most of europe transitioned to a different currency in the last decade and as far as I can tell, the sun still comes up in the morning.
    It is just one of the many things that will have to decided upon after the vote on whether Scotland should be govern itself is taken.

  • Rod C

    Leslie – how can the Scottish Government sort an issue which is not completely in their control?

    You want an answer on a negotiating point before negotiations begin.

    You’d be better asking Osborne to explain how he plans to save the pound in the event that Scotland does leave & there is no currency union? Do you think the pound can handle losing 10% of the production that underwrites it? And if Scotland don’t take a %age of the debt as a consequence it’d be a double hit on the pound.

    There’s a good reason Salmond is sticking to his guns, because it makes sense for both. A plan B that involved pegging to the pound would be in danger from the weakness of the pound without Scotland. He’s thinking seriously about what happens, Osborne et al are just trying to scare undecided voters.

  • Ed

    “All over the world, what matters is not the unit of denomination, but how the money is distributed and used.”

    What matters is that in a currency union, the members give up monetary autonomy, and when that happens, the smaller members effectively cede fiscal autonomy too.

    This isn’t a trivial question, but there’s no reason Scotland couldn’t have its own currency, and there’s no also reason they couldn’t continue using the pound post independence without a formal treaty in place. But with or without a formal union, if Scotland is on the pound and it faces an economic downturn, it will be reliant on the Bank of England to cut rates and possibly even HMT and the Bank agreeing to backstop Scottish debt.

    An independent Scotland needs its own currency.

  • Les Wilson

    I really feel this is a scare tactic by BT, however, I think there is an ever growing
    issue that this is starting to run away from Osborne, Balls et al.
    The fact that they would lose ALL of Scotland’s exports AND the value of our oil and gas going through a sterling zone would be devastating for the very fragile rUK economy is what they are risking.

    A wee reminder, Scotland has every right, as other nations have already proved, that to force Scotland out of a CU, would be very bad for the servicing of the accepted rUK debt in regards to the generous offer the SG is making to pay towards that debt, which is not theirs.

    When osborne has to face this and other realities he has created for the people of rUK, he will have to speak to the SG in more positive terms, at which point the SG may ask,
    “Ok, what will you offer us to join a CU, with a near bankrupt currency? “

  • passerby

    Sorry about this O/T but the hypocrisy of; perching atop of the piles of bones of the war dead and holding the planet responsible for the atrocities of the WWII, while screaming antisemite at anyone who abhors the inhuman conduct of the Jewish supremacists, in an absurd aggregation of the total number of incidents across the European Union as the sure fire signs of unforgivable antisemitism.

    All the while the zionist mercenaries conducting the same tactics as the Nazi that are to be abhorred and despised.

    Fact that the corporate media are too busy delivering Der Stürmer style of “news” going unnoticed as to which is the minority under the fire in this round of hatreds and genocide that are raised as standard political tools and control constructs.

    The sooner the Scottish can run their own affairs the better for anyone caught up in this web of deceit and hypocrisy.

  • Salford Lad

    @ Rod C.
    The UK Govt has ceded control of its currency issue to the private banking system. The Bank of England only issues 3% of the pound sterling, when it prints and distributes cash to the High street banks. The Bank of England receives a nominal payment for this called seignorage.
    The UK Govt has minimal control of its economy, because it does not control the 97% of digital currency created by the PRIVATE banking system.
    This is the reason the e

  • Juteman

    The currency ‘scare’ tactic might have worked 50 years ago, but the majority of Scots are well travelled these days. They are used to dealing with many currencies, and realise that it is a minor matter what it looks like.

  • Ba'al Zevul (With Gaza)

    This is the reason the e financial system went bang in 2008 and everyone had to give money to the banks.

    …you were about to say?

  • Ken

    I survived the Mexican peso crash of 1994 when the country switched over to the dollar, packets of cigarettes and bottles of tequila, before stabilising the currency eventually. Nobody is suggesting that anything similar will happen in Scotland next month.

    If we vote for independence, and I am a yes voter, then we have to accept that the transition may be difficult, but that is the price that we will have to pay to be rid of the Tories forever.

    Sadly, the bulk of the middle class are in the no camp, and to make matters worse, the council estates are still pretty disengaged from this whole process. Many people are not even registered to vote as they are so alienated from it all.

    If places like Muirhouse and West Pilton in Edinburgh turn out in large numbers then yes will win, and that is about the only hope that Yes Scotland has. I blogged an appeal for that today, but I have no idea how that mobilisation can take place.

    I think we are going to lose this one…

  • Rod C

    Ken, check out the Radical Independence Campaign – they’re targeting the very disengaged areas you’re talking about. Voter registration is up 800,000 since last year. The message is getting there.

  • John Macadam

    The best antidote to a poor show in Muirhouse is to canvass it. Don’t bother blogging about it. Get out there and knock some doors. The added benefit is that way you will have definitive evidence of the strength of the vote and not have to rely on second hand info

  • Jack Fletcher

    On Scotland, I see there has been some media reporting of the response to the celebs letter:

    The letter itself does not make a claim that the signatories have a vote or that they live in Scotland. Indeed they quite clearly address the letter to voters in the debate rather than pretending anything else.

    So why, Craig, ask about where they live? They are entitled to freedom of speech as much as anyone else which you should know if your ‘Human Rights Activist’ label is based on an understanding of how human rights operate. Don’t lose the plot on the referendum just because the No vote looks to be ahead. Have the good fight on the basis that you are also entitled to your own view. But please don’t trample on others’ enjoyment of their rights otherwise you have already lost the good fight.

  • Habbabkuk (La vita è bella) !


    “I think we are going to lose this one…”

    Don’t worry too much about it, laddie.

    That’s the wonderful thing about political manoeuvres of the referendum kind : they’re one-offs if you win, but if you lose you can keep coming back again with the same demands after a decent interval.

  • Habbabkuk (La vita è bella) !

    But on reflection, referenda do offer possibilities?

    I wonder how many of the “Yes” brigade on here – who are by definition in favour of this referendum, are they not? – would argue for referenda on a number of other issues of public interest such as

    – capital punishment

    – immigration from non-EU countries

    – taxation (in particular, on the idea of a flat-rate tax)?

  • Ken Waldron

    Well I was there

    I recall as I entered through security that most of us went in directly after an id check but there were a number of people put to another queue. I wondered if these people had forgotten id or something, but I’m sure I saw at least one of them show a driving license and still be put in that line. A guy in front of me seemed to be being refused entry by security even though he had his id too.
    In the auditorium next to me initially there were eight empty seats out of ten and very shortly before the start of the debate there where still five empty on my row my side. I looked around and saw there were quite a number of others all around, which was most odd in the situation: that so many people wouldn’t turn up in such large numbers to this top billed debate.
    I mentioned this to the girl one away from me. She said she had heard before we entered that one of the people who was meant to be dealing with the audience ” had not processed the paper work” and that they were refusing people entry because of that. So certainly I can confirm that this story was currency at the event itself.

    There were indeed a lot of people suddenly lacking at that debate at VERY short notice.
    In fact there were so many people missing that near to transmission I had an ipsos mori/STV? employee sitting next to me to fill in the final space of a missing member of the public: the very employee who had phoned me to confirm my attendance, until she managed to find a replacement who was another lady who had an STV id around her neck. before she did so I asked her about the curious shortage of people and she told me that “this happens all the time…” “…some people delayed because of traffic accidents” etc
    Interestingly, Another gentleman “member of the public” whom I was sitting next to and chatting to in the foyer before we entered the auditorium and whom it turned out lives quite near me and was tather vocal at the event itself, also let slip he himself worked in polling for, well… Ipsos Mori.
    To me the audience itself seemed very loaded with the middle classes: indeed with a very large number of English or Public school accented Scots.
    On the performance, the vehemence of the heckling of Salmond from the audience on the currency issue took me by surprise… I didn’t quite seem natural and had the feel of an organised ambush to it.
    Considering the numbers missing in the auditorium and the refusals I was seeing at the main door I was unsurprised to find out later that a good number of people who HAD been invited (From a paired friends group it seems: on YES one NO) had been refuse entry. Of the refusees I know of both were indeed from the YES side of those pairs.
    One has recently contacted mt to tell me that Ipsos Mori claim STV had “dropped the ball…got the numbers they needed and didn’t phone the people that were not required.” He found this most suspicious as the STV rep had told his details were never actually given to them. Also, though blaming STV Ipsos Mori had itself now offered him a financial compensation deal…
    I never did get to ask my own question but I did take advantage of a situation when the fellow in front of me forgot his question to try and turn the question of the likely bucketing of the pound without Scottish assets and oil behind it in a currency union back round on Darling. Alas he never did answer…

  • Roderick Russell

    It was Rupert Murdoch who tweeted there was “no such thing as free press in UK” so it is hardly suprising that there is a coordinated effort against independence for Scotland throughout much of the UK media. Indeed as David Leigh of the Guardian wrote in British Journalism Review way back in 2000 “British journalists – and British Journals – are being manipulated by the secret intelligence agencies.”

    Without oil to back it, or the cooperation of an independent Scotland in a currency union, the pound collapses – so it is hardly suprising that a coordinated effort is being made in the media against independence. What is suprising is the unmitigated gall of the London establishment and its intelligence agencies in pretending that they wouldn’t want a currency union. In my view it is Scotland with its potential for a strong oil backed currency that wouldn’t want to tie itself to a weak pound.

    But as Snowden revealed when he leaked those slides used by GCHQ in its training program for operatives, covert action includes “The 4 D’s: Deny / Disrupt / Degrade / Deceive”. Masters of the art of denial and deception (i.e. lying) as our spooks are, it shouldn’t suprise anybody that there is a coordinated campaign of propaganda against independence.

  • Republicofscotland

    Sorry to go off topic Craig, but I thought this was rather poignant, on BBC radio Scotland this morning there was heated debate over Palestine/Israel, anyone one man who’d visited Gaza, said that a journalist had told him this. Palestinian children are writing their names on their arms, legs and torso’s when asked by a foreign journalist why they were doing this, the reply was, when I’m blown up, they’ll know who I am and they’ll collect all my body parts, with my name, and bury me.

  • Rod C

    @ Jack Fletcher, where they live might not matter – but it might just be pertinent that the Dan Snow (who started the ‘petition’) is the son in law of the Duke of Westminster who owns a vast swathe of Scotland & is presumably perturbed at the Scots getting power and moving to the left. You know, since his wife stands to inherit that vast estate…..

    As for the rest of the signatories, in a lot of cases it reminds me of Brass Eye’s ‘Say No to Cake’ episode.

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