Counterpunch, Topic: Democratizing Money
Link: Democratizing Money
To make a fiat currency work we may need something like an Ethical New Deal to clarify the principles behind any Green New Deal. Who should issue money? Who should get it? Why?
Excerpt:
"Most people don’t realize that the government does not issue money; the private banking system does, by issuing loans at interest. The last time the government issued money in any quantity was during the Civil War, when so-called greenbacks were printed by the Treasury department to pay for the war. Greenbacks were not debt, but direct currency printed to give government contractors money for the goods and services provided, which they then spent into the general economy, stimulating commerce.
Greenbacks were very successful; issued responsibly, only as needed, they made it possible to finance the war without onerous debt or inflation. After the war, however, private banks fought hard to eliminate greenbacks, and finally succeeded. They did not want their near-monopoly over the issuance of money undermined by public control of the monetary system. Today, well over a century later, how money is issued is again an in question.
Let’s be clear. Private banks create money by issuing loans to individuals and companies; their profit comes from charging interest and, if necessary, foreclosing on the assets of delinquent debtors. It’s essentially a private tax for a public service.
Why banks should charge interest for creating money to loan out is a mystery. It’s not that banks are lending out money they have on deposit. They have to keep a small reserve, it’s true, but something like 90 percent of loans are simply creation out of nothing. You want a mortgage from the bank and, once they approve you, they enter–magically!–the amount you need on your account. Then they charge you as much interest as they can for something that should be a public service offered on a non-profit basis.
[...]
Money in fairness must somehow be made available to the general public as well, and zero-interest public lending would do the trick. Banks should be public utilities, it would seem, not profit-making enterprises. Imagine being able to borrow on decent collateral the resources you need to improve your life, without having to pay back a fortune in interest."
To make a fiat currency work we may need something like an Ethical New Deal to clarify the principles behind any Green New Deal. Who should issue money? Who should get it? Why?
Excerpt:
"Most people don’t realize that the government does not issue money; the private banking system does, by issuing loans at interest. The last time the government issued money in any quantity was during the Civil War, when so-called greenbacks were printed by the Treasury department to pay for the war. Greenbacks were not debt, but direct currency printed to give government contractors money for the goods and services provided, which they then spent into the general economy, stimulating commerce.
Greenbacks were very successful; issued responsibly, only as needed, they made it possible to finance the war without onerous debt or inflation. After the war, however, private banks fought hard to eliminate greenbacks, and finally succeeded. They did not want their near-monopoly over the issuance of money undermined by public control of the monetary system. Today, well over a century later, how money is issued is again an in question.
Let’s be clear. Private banks create money by issuing loans to individuals and companies; their profit comes from charging interest and, if necessary, foreclosing on the assets of delinquent debtors. It’s essentially a private tax for a public service.
Why banks should charge interest for creating money to loan out is a mystery. It’s not that banks are lending out money they have on deposit. They have to keep a small reserve, it’s true, but something like 90 percent of loans are simply creation out of nothing. You want a mortgage from the bank and, once they approve you, they enter–magically!–the amount you need on your account. Then they charge you as much interest as they can for something that should be a public service offered on a non-profit basis.
[...]
Money in fairness must somehow be made available to the general public as well, and zero-interest public lending would do the trick. Banks should be public utilities, it would seem, not profit-making enterprises. Imagine being able to borrow on decent collateral the resources you need to improve your life, without having to pay back a fortune in interest."
Comments
Post a Comment