[A-List] Creating New Money
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Mon Aug 30 18:23:20 MDT 2010
Some Frequently Asked Questions
by James Robertson
Prosperity (January 2003)
In the introduction to Creating New Money (2000), co-authored by
Joseph Huber and James Robertson, which we reviewed here the (then)
Executive Director of the New Economics Foundation Ed Mayo, wrote,
"We look forward to monetary reform moving to the centre stage of
public and policy debate in the way that eco-taxes, stakeholding
and debt cancellation have done".
Here James Robertson presents a short summary of answers to
frequently asked questions on the reform proposed in his book.
1. What exactly is debt free money?
Debt-free money is exactly what it says. It is not an interest-free
debt. It does not have to be paid back. It is money created and
issued as a gift.
2. How is debt-free money to be issued?
The amount of debt-free money to be created and put into
circulation at intervals, in order to increase the money supply,
should be decided by an agency of the state and given to the
government to be spent into circulation. In the present situation,
this agency will be the central bank, in a further stage in its
continuing historical evolution as a central monetary authority. As
it already does in the UK, it will make its decisions on a
professional basis, independently of elected politicians but in
accordance with objectives published by them.
3. If the new money is deposited in banks, what's to stop them
issuing more credit on the back of it?
It will be made illegal for anyone other than the central bank to
create new non-cash money (traditionally known as "credit"), just
as it already is illegal to counterfeit and forge new notes and
coins. Banks and all others who lend money will have to lend money
that exists already. It will either be theirs already or they will
have borrowed it from elsewhere. In Creating New Money we spell out
what this will mean.
4. How will the new money be repayable?
Non-cash money issued in the new way will not have to be repaid. It
will remain in circulation. On any occasion when it becomes
necessary to reduce the money supply, the central bank will require
the government to pay the required sum to it out of tax revenues
and will then destroy it, by returning it whence it originally came
- that is, by wiping it off the books and turning it back into thin
5. Will it cut the cost of government investment?
It could do, yes. The government could use this money for
investment. But alternatively it could use it to cut taxes, or to
cut the existing level of government debt, or to increase spending
on public services like education, health, et cetera. So there
probably won't be enough of this money to cover all the
government's investment needs, and some government borrowing will
still be necessary. But the commercial banks will no longer be
allowed to create money out of thin air in order to lend it to the
government at interest.
6. Why isn't it inflationary?
Controlling the growth of the money supply by having a professional
agency of the state deciding directly how much it should be
increased, rather than indirectly, as at present, by regulating the
price at which borrowers borrow from banks and banks lend to
borrowers, will give better control of inflation - and bring other
important economic and social benefits as well.
Please print out, photocopy and distribute these articles. Also
copy and paste them to emails, and circulate widely, and please
include all the essential contact information below. Thank you.
Essential Further Reading:
PROSPERITY: Freedom from Debt Slavery is a four-page quarterly
Journal which campaigns for publicly-created debt-free money.
PROSPERITY is edited and published by Alistair McConnachie and a
four-issue subscription is available for GBP 10 payable to
PROSPERITY at 268 Bath Street, Glasgow, Scotland, UK, G2 4JR. Tel:
0141 332 2214; Fax: 0141 353 6900, Email:
contactus at ProsperityUK.com http://www.ProsperityUK.com. All
back-issues are still available:
The forty-page Report, Clarifying our Money Reform Proposals,
launched at the 2006 Bromsgrove Conference, is available for GBP 10
payable to PROSPERITY and is essential reading for beginners.
The Grip of Death: A Study of Modern Money, Debt Slavery and
Destructive Economics by Michael Rowbotham (Jon Carpenter
Publishing, 1998). Available from PROSPERITY.
Goodbye America! Globalisation, Debt and the Dollar Empire by
Michael Rowbotham (Jon Carpenter Publishing, 2000). Available from
Creating New Money: A Monetary Reform for the Information Age by
Joseph Huber and James Robertson (New Economics Foundation, 2000).
Available from PROSPERITY.
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