Strike Debt from Money

Since Positive Money UK instigated a debate at the UK Parliament over the creation of money [UK Parliament Debated Money Creation for the First Time in 170 Years], here is a round of links touching on the idea of debt-free money and/or reforming the monetary system in such a way that debt could not drain away money from cities, nations, and people:

Here is the full video of Steven Baker’s time on the floor beginning the debate: http://youtu.be/bXOkmD8Eozs

Bill Still gives his commentary on the parliamentary debate in his five-part series from his YouTube channel:

Number 1: Intro. Number 2: “Store of Value”. Number 3: QE. Number 4. Number 5: “Tested to Destruction”

The main takeaway from Still is a mantra that he often repeats:

“It matters not what backs money but who controls the quantity.”

What is behind money, as if money were a mere appearance that needed a substantial thing to back its value before it became real, is irrelevant if the amount in circulation can be controlled by other means. As long as the supply of money relative to market activity is stable, whether money is explained as gold, or state credit, or a “store of value”, or a debt token or anything else will not make a difference. Keeping the supply of money stable means taking steps to ensure that money is introduced into the economy in sound, healthy ways (vs. letting banks do so by issuing loans).

When bank loans are payed back, money is destroyed and the supply shrinks. When too many loans are issued, more money is in circulation and therefore people are more indebted. Indebted people are expecting that their incomes and investments will continue to grow with the economy, but when interest rates are constantly lowered at the source of money (in central banks like the Federal Reserve), banks have access to “cheap money” (i.e. they pay very little interest on what money they borrow) and they inflate value of money with excessive loans through fractional reserve banking. When all signs are pointing up and the illusion of constant growth keeps people thinking they can make money simply by riding the flow of time, it is hard to put a stop to the fountain of easy money and contract the supply.

This video from the Caspian Report explains the 2008 financial collapse and how the cheap money created by banks for the housing market was inflationary. The way banks are able to issue credit at will during booms distorts the value of money, further inflating it and leading to a greater bust.

Ellen Brown’s latest piece on Cypress style bail-ins that could come to the US in order to cover the banker’s massively over-leveraged derivatives market. This could be the outrageous spark that will push people to reign in the Too-Big-To-Fail banks. The question is: how many people will tolerate having their deposits seized to keep already maligned mega-banks solvent?

Her solution is for states, cities, and the federal government (really any public body) to own their own banks and stop borrowing money from private banks that must turn a profit for their shareholders and employees.
[The Public Banking Institute]

The big message about money is that the mechanisms in place to control the total quantity of money are obsolete. Money must be created without borrowing and without going into debt at the personal and governmental level to prevent banks from sucking money out of the circular economy. Striking debt from the process of creating money would be a simple fix to help turn the tide against systemic domination by rentiers and financiers.

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