Money. We all know what it is, but who creates money? The answer is actually surprising. 97% of money in our economy is created by private banks when they make loans, and this is carried out by these banks simply typing numbers into a computer. In doing so, private banks invariably divert this newly created money into house price bubbles and other forms of financial speculation.

So, in response to this, a campaigning organisation named Positive Money has sought to raise public awareness about such money supply issues, highlighting, in a recent book named Modernising Money(2012), how house price inflation, high levels of personal debt and widening inequality can all be linked to who has the power to create money.

I went to speak with Positive Money’s founder, Ben Dyson, in their London office. I started by asking about the aims and objectives of the organisation.

Ben Dyson: We're trying to get a banking system that works for society and not against it. We have seen all of the chaos that the financial system has caused over the last few years and since then there hasn't really been fundamental change. There's been a lot of tweaking around the edges, but we haven't actually addressed the root cause of the financial crisis and also the root cause of many of the social and economic problems that we are facing today.

Christopher Daley: So, Positive Money is therefore looking to bring forth quite radical changes rather than tinkering around the edges of monetary reform?

BD: Yeah, we have got some ideas about fundamental things that need to change, which some people say are radical; in reality they have been done in the past. But, it is a big step further than what the authorities have made with regards to fixing the banking system in response to the crisis.

CD: Ok, could you just outline, very quickly, what those big changes you want to see are?

BD: At the moment it's really about the power to create money and who has this power and how they use it, and if you ask people in the street, most people are under the impression that money can only be created by the government, because that's what you see on every £10 or £20 note. The reality is that the government only actually creates 3% of all the money that exists. The other 97% is just numbers in a computer system, it's those numbers you see when you check your bank balance. They don't represent any real money, they're just an electronic entry into a computer. What that means is that those numbers are created by banks when they make loans, so when you walk into a bank and take out mortgage, that money is not coming from someone's life savings, it's actually created out of nothing. This has implications for almost everything, from debt to poverty to inequality to how much your house costs to whether there is a financial crisis or whether the economy is growing or shrinking. What we're advocating is that we shouldn't be leaving the power to create money in the hands of the same banks that caused the financial crisis and we should remove that power from those banks and return it to a democratic, transparent, accountable body that works in the public interest rather than in the short term interests of the financial sector.

CD: So that led me to ask Ben why, in the aftermath of the 2008 financial crisis, these issues surrounding the control of money supply have not featured more prominently in the news. And I also asked whether these debates about money supply have been seen before?

BD: It's a good question. There used to be huge debates about this a hundred years ago, particularly around the time of the Great Depression as well, and this discussion of money creation was debated by really high profile economists. In the US, when the New Deal was implemented after the Great Depression to get the US economy going again,