 10 years later, I found myself at Lehman Brothers, where I was the chief architect of two global programmes. I was there on a contract and it really wasn't my fault. But what I discovered, and I've worked at several investment banks and regulators as a software engineer, and when you ask people how their business works in enough detail to write the software, you very often find they don't really know. They know how to make a big pile of money and sort of knock along. But they certainly don't understand even their own business in great detail, enough detail to write the software. And the idea that they understand the theoretical basis of money is a bit laughable. People just don't. So that gave me the confidence to understand there was really something wrong and the result was the Cobdon Centre. I decided to get myself into politics by some miracle. I got myself elected within three years of setting out to try. So here I am, for some reason, a Conservative MP which certainly took me by surprise and also my Liberal Democrat voting dad. So that's just a little bit of my personal journey. It is all about prosperity, it's all about justice and I think actually that the system of money is now prejudicial to both those things, which is why I'm so delighted to be here. So we've got this massive time of crisis. I just want then to move on to something that Mervyn King said, which I know Ben often quotes, positive money quotes, of all the many ways of organising banking. The worst is the one that we have today. Now positive money chooses to focus on fractional reserve deposit taking for very good reasons indeed. What I'd like to do, and I'll try not to be too technical or too rambling, I'd just like to talk about the sheer scale and scope of what is wrong with the banking system as it is. The first point is this credit creation. The fact that the banking system as a whole is able to just keep creating credit out of thin air, and I'm not going to say much more about that because I know Ben will cover it in detail, but that credit is not backed by anything real. Imagine a tailor makes a suit and that allows you to buy it and pay for it over a year. That credit that he's extended to you, that privilege of paying for your suit, of having it now but paying for it over a year, that is backed by real prior production. And one of the problems with thin air credit creation is that it's not backed by prior production. The second thing is irredeemable money. Now people ask me why I carry a silver coin around with me, and the answer is actually very simple. It's because I can't afford gold. But if just suppose for a moment that like throughout all of human history money was actually a commodity, whether it be silver or gold, which these days is not often talked about, but just imagine that it was. Credit expansion on top of this, if you pyramid up the issue of credit on top of this with say a reserve ratio of 10%, the credit expansion process comes to an end when you've got one of these and 10 claims on it. Now we might not like, there's lots of people don't like, that's lots of people think it's great, but it's just a fact that if you've got commodity money as the basis of credit expansion, the credit expansion comes to a stop when you hit the reserve ratio. But what happened in 1971 is that Nixon closed the gold window and thereby disconnected all money from commodity, a commodity backing and that allowed the banking system to go off and create wild quantities of credit without any real limit. So that's the first point, credit creation and irredeemable money and I think that is probably the most, those two points together are the most important part. The second thing is central banking and interest rates. Apart from the central banker being a lender of last resort, which makes the credit expansion process a risk that companies can bear. They also stomp into the interest rate market and manipulate it. Interest rates are a very, very important signal about people's time preferences for consumption. There's a lot in what I've just said, but it's actually relatively simple. We all value a loaf of bread on the table today more highly than a loaf of bread on the table tomorrow or next year, but by how much? And this time preference, how much more do I value having it today than having it next year? That is the interest rate. So it's a very, very important price signal. It's tied in with real savings, prior production, all that stuff. But it's an important price signal about time. So when the central banks stamp into the interest rate market and deliberately raise and lower the interest rates system and we know that it ripples through the market because if you've got a mortgage and you can remember the day when interest rates used to rise, then you know that your mortgage very quickly went up when interest rates went up. And if you've got a savings account, you know that interest rates very quickly go down when the central banks lower them. So what's happening in central banking there is that they sit down in this planning committee and set an interest rate, and they're deliberately shifting this entire system of price signals about people's preference for consumption in time. So if interest rates are too low for too long, is it any wonder that debt is at historically high levels and savings at historically low levels? So this, honestly, this is the fundamental cause of the boom bus cycle, the deliberate discoordination of the economy through time by the manipulation of interest rates. So that's the second point. Legal tender laws and currency monopoly. Nobody's forced to accept this ounce of silver as money, nor should they be. But it's just the fact that in the UK you can't be sued if you settle a debt in Stirling. And what it does is create an effective monopoly for the government on Stirling. Now, I'm proud of our currency, but it's just a fact that in the UK you've effectively got one money to choose from. Some currency reform proposals include competing monies. I think it's great that we've got Josh here, wherever he's gone, I've missed him, but with the Brixton Pound and so on, it gives me great hope that people are coming up with these competing currencies. We should, for me, have choice in currency rather than government monopoly. I'm afraid a bit of political economy here. For me, generally, I'm averse to government monopolies on anything. I think the government generally doesn't do very well when it has a unique and legally enforced monopoly. So that's another point that's wrong with it. Next one is deposit insurance and limited liability. If you allow this system where bankers in the broadest sense can create money and take huge risks with it, if you then also underwrite their risks with deposit insurance and give them limited liability so if it all goes wrong, they don't lose their house, is it any wonder they make ridiculous decisions and take gigantic risks? Deposit insurance is only necessary on demand accounts because we have fractional reserve deposit taking. Everybody wants it, it's very scary thought to just take it away at the moment, nobody's advocating that. But I'm just saying another massive flaw in the banking system is that we socialise to the huge risks which financial professionals take by having deposit insurance and limited liability laws. There's been extensive and ineffective regulation, just one example, the International Financial Reporting Standard. I introduced a private members bill, which explains through an example of what I called Ruritania, how bankers are able to manufacture profits like 30 years' interest payments, 30 years' payments on a mortgage upfront and pay themselves a bonus out of it now, despite the fact that the payments haven't been made yet. It's an astonishing wheeze and it's being done all the time, this is why derivatives are used. And yet then over the last week or so, I've seen headline after headline in the financial press, particularly Citi AM, explaining that bank profits at the moment are largely attributable to being able to account for loans in certain ways. The accounting system is fundamentally broken, and that matters when, as today, our money and banking system is fundamentally a big accounting game. And that is again a huge problem. So before I come to the final point, I'll just recap. Credit expansion and irredeemable money. Well, the credit expansion is here as positive money and that's why I'm happy to support it. Central banking deliberately discordnates interest rates. We've got legal tender laws and government monopoly on money. We've got deposit insurance and limited liability, and we've got extensive and ineffective, obviously, ineffective regulation. Now, on top of all of that, the whole system's booby-trapped, brilliant. These credit default swaps, it depends who you ask, but Andrea Ledson in her maiden speech used the word quadrillions in terms of talking about the total liabilities around credit default swaps and these derivatives. So the system is also booby-trapped. When somebody defaults, it's possible that will trigger a great wave of credit default swaps. It's so bad, it's almost comical, but this leaves us then with something of a problem. I think that the governor of the Bank of England was absolutely right to say of all the many ways of organising banking, the worst is the one we have today. There is a question, if he knows that now, did he know it 10 years ago and why didn't he do anything about it? That perhaps is a question for another day. So is it a conspiracy or a cock-up? The first thing I'll say is ignorance is one of the biggest problems, not ignorance in a way where I'm attacking people, just simply people don't know about monetary theory. On the Conservative benches, there's me and Douglas Carswell who are really read into monetary theory. On the Labour side, I think Michael's been reading some of it and perhaps one or two others. People read economics, they don't often read monetary theory. So the first problem is that people don't understand money. There are large numbers of economists, as I've found in discussion, who are very good economists, but they just take money for granted. And it's half of every exchange transaction in our economy, and yet they don't really study it. Politicians will say it's people have now started sneaking up to me in Parliament saying, I don't really understand economics, where should I begin? Well, okay, great, but we've got big decisions to take and we ought really to understand economics. The second point is intellectualism and ego, and all fourth thinking, obviously I'm standing here because I've thought about this and delighted to share some ideas. But we have to be careful that when we think things through and think we've found an answer, we kind of hold onto those answers a bit provisionally and have some humility and are prepared to think we might be wrong. So I think fractional reserve deposit taking is wrong. I think it's a breach of sound property rights and contract, but I'm also aware of the academics on the other side of the argument who think it's fine so long as you get rid of central banking, deposit insurance and limited liability. But the point is this, we are intellectuals, you're all here because you're interested in ideas. My plea is just that we need to hold on tentatively to our ideas, but people don't of course. People who've worked in the financial system for a very long time believe they know how it works, or even though they haven't studied the theory. So it's a plea really against ego. Ego is one of the big things. If you were to look up Coon and the structure of scientific revolutions, he talks about the paradigm shift, and I'm just aware of time so I'll stop there, but we've ended up that we need a paradigm shift in economics. Political economy comes into it. If you look at Alan Greenspan's essay on gold, he was really clear that the welfare state is incompatible with non-inflationary money, and that's I think a very important thing to think about when we're having this conversation. But political economy comes into it, and also partisanship. If you look at where I stand in the House of Commons to speak, I'm usually at the bottom of the chamber, because when you stand up then you can talk to both sides and make quite consensual speeches, and the result is I'm making friends on this subject on all sides of the house. But if you watch the House of Commons usually, we've just got people shouting at each other and trying to score political points. We're never going to get to the bottom of this problem by just scoring political points or taking the lines we're given. But what it does mean is it entrenches the status quo. We could talk about institutional incompetence, public choice theory, what it means to win an election and then have to pay for the promises you've made, and so on and so on. Bear in mind that the system of money we have evolved out of Bretton Woods. Bretton Woods was deliberately designed at the end of the Second World War. Nixon closed the gold window. That gave us the system of institutional inflationary fiat monies that we currently have. And I believe that that system of money is now in profound difficulty and may in fact be ending. So I think it's about evolution, and it's about convenience. I think it's about politicians finding that currency debasement is a useful way to fund promises which can't be funded through tax. So what I'm saying is if faced with a question conspiracy or cockup, it's a cockup. It's just a cockup. And it's a product of a bunch of institutional factors, not all of which are well understood. And for those few people who really do understand money in banking like the Governor of the Bank of England, there's very little I suggest that he can really do to shift it because the momentum behind it is so large. All of that is just an argument for being here and for talking about these ideas. Thirdly, towards an ideal, it's like the Tower of Babel out there on this subject. What's great about positive money is they've picked a practical proposal that can be taken forward, and they are single-mindedly pushing it. And it's an idea capable of appealing to left and right, to greens, to libertarians. It is an idea that transcends party politics, transcends political economy. It's practical. So I just think it's wonderful that positive money are doing this because it can cut through that Tower of Babel. There's no way positive money will take all the theorists with them, though. Just to talk about some of the ideas towards an ideal. If you talk to Professor Tim Condon or looked at his books, you would find that he views our system as having evolved, which is true, and therefore being broadly right. And his answer would be to privatise the Bank of England. I don't agree. The next one is the argument for 100% paper money, 100% backed in demand accounts, paper money, effectively what Ben is advocating with positive money. That idea, I like to call it constitutionalising money after a guy called James Buchanan, Nobel laureate of public choice theory. His idea for reform is to bring money under constitutional control, and I think that that is the right next step. That idea can obtain support from Keynesians, from monetarists and from Austrian theorists, but it doesn't get support from all of them. But I think it's the best. If you plot the Venn diagram, it's the best centre ground. The next idea is free banking. This is unregulated banking. To be for it to work, it requires commodity money, no limited liability, no central banks, no legal privileges whatsoever, and to just go on and let people take deposits in the form of commodities and maybe have fractional reserve deposit taking at issue notes and demand deposits. Such a system was idealised in Scotland in the last century. It had its crises and its difficulties, but if you talk to say my friend Professor Kevin Dowd, he's a very practical economist, and he would just say the best monetary system the world's seen is the Scottish free banking model. Currency choice, higher, Nobel laureate, actually is best economics in the 30s when he was arguing with Keynes. But he kind of gave up on government-provided money or gave up on really properly fixing, correcting money. And in the 70s he advocated denationalising it, which sounds kind of crazy, except it was Treasury policy in 1989. The Treasury suggested as Hayek did that it would be more practical to let all the currencies of Europe compete with one another in every country than it would be to have this idealised single European currency. Now actually looking back from now at what he wrote, he was probably, I'm sure he was right, he was right. It was more practical, it would have been better to just let drachmas be used in Britain alongside whatever else people wanted to use. That would have allowed currency competition to drive up the value of money and tend to avoid this credit expansion. So that's a quick survey of where people are coming from. If you talked to George Selgin, you would find that he advocates fractional reserve free banking absolutely vehemently. He's brilliant on the history of it, he absolutely rejects 100% reserves on deposits and he sets out to put out an ideal monetary system. But the last time I heard him speak he was absolutely uninterested in a transition plan. So that's great and he's a brilliant theorist, I've got great respect for him, had a nice lunch with him, got on well. Right, but we've got a problem now and we need a transition plan, so I support this. So for me that my proposal is this, I'm just going to come towards a conclusion. Given time, if there's time, I would constitutionalise money through something like positive monies proposals and then I would de-nationalise it because I don't think institutionally you can't trust politicians and officials with the printing press. If there is a sudden crisis, a monetary catastrophe, a total banking collapse or even a hyperinflation, then we need a different plan. I think the best one I've seen is my colleague Anthony Evans two days, two weeks, two months. If you go to Cobden Centre and you search two days, two weeks, two months, you'll quickly find it. But what he's set out is a plan to return to free banking over that period. So it's a sudden crisis response over a weekend. The emergence of free banking over two weeks and then over two months really getting a state out of banking. It does, and it would allow a return to commodity money and there's a variation on it that would make 100% reserve deposit taking the default and allow fractional reserve banking as well. We're currently having internal arguments about which way it should be. Anthony thinks it should be fractional reserve by default and 100% if you want it. But that's another conversation. So that's where I am. Constitutionalise, then de-nationalise. Just to conclude, I mean it's brilliant that this year there was a laugh and a welcome. Thank you very much. It's much better than being jeered. I'm sincerely trying to deal with this in Parliament and it's a great pleasure to work with Ben. I do genuinely believe that everything is at stake. We live in a society based on the division of labour and people take other views and I think they're wrong. If you live in a society based on the division of labour you have to have a means of exchange. That means of exchange is money. Money has to work, it has to hold its value, it has to be under control and reliable rather than being chaotic. So at the moment the pattern of events is actually pretty highly predictable. If you read in my case in the Austrian school there's not very much that's happening at the moment which in general we wouldn't have predicted. It's difficult to say exactly when things will happen because it's very dependent on the actions of big players like politicians in central banks. But in terms of the crisis having got worse since last year, well I did expect that. I did write it down in web articles. So economics needs a paradigm shift and the reason it needs a paradigm shift is to deliver prosperity, peace and justice. If we keep on doing what we're doing we're going to get more chaos and we're going to have more people questioning the fundamental basis of society. Some may say that's right but I'm a conservative in many ways. I don't want a revolution. People get hurt in revolutions. I want evolutionary change. Continuous social progress. Prosperity and peace. So I have got hope and optimism. I've got hope and optimism because you're here because of positive money, because of the Compton Centre and because actually I can see the arguments going our way.