Between Debt and the Devil discusses the long history of proposals to remove the power to create money from banks.
There are many reasons to change the current money system.
Extreme inequality is the main economic, political and cultural evil of our times.
Instead of just one villain, however, the story of how our money is created is a whole history, with good intentions travelling alongside the usual motives of greed and deception.
There’s no getting away from it. Banks create money out of nothing when they extend loans and then charge borrowers interest on this newly created capital.
So what type of monetary framework the Greeks should adopt if they were to part ways with the Eurozone?
Since the Bank of England published a paper earlier this year confirming that banks create money when they issue loans many more voices have joined the money creation debate.
Last week saw another major breakthrough in the monetary reform debate as leading UK economics commentator, the Financial Times’ Martin Wolf, argued that the power to create new money should be stripped from private banks and returned to the state.
The global finance sector today exercises extraordinary power over society. The sector dominates economic policy making, undermines democratic decision-making, has financialised all sectors of the economy, and has made vast profits, often at the expense of both governments and the productive sector.
If our present banking system, in addition to fraudulent and corrupt, also seems “screwy” to you, it should. Why should money, a public utility (serving the public as medium of exchange, store of value, and unit of account), be largely the byproduct of private lending and borrowing? Is that really an improvement over being a by-product of private gold mining, as it was under the gold standard? The best way to sabotage a system is hobble it by tying together two of its separate parts, creating an unnecessary and obstructive connection. Why should the public pay interest to the private banking sector to provide a medium of exchange that the government can provide at little or no cost? And why should seigniorage (profit to the issuer of fiat money) go largely to the private sector rather than entirely to the government (the commonwealth)?