bg
Member of DD Central
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Post by bg on Nov 26, 2016 13:05:00 GMT
Read their proposal number 1. They want to stop banks from making loans.
Seems you want banks to continue on as they are but allow the government to monitise its debt and have no fiscal framework.
Basic economic theory explains why this does not work. This has happened before in history, notably in Germany and Zimbabwe with disasterous consequences with misery inflicted on millions (and real misery, not getting a 2% pay rise instead of 3%).
If the government could just print as much money as they like then the pound in your pocket becomes worthless (after all money is just a store of value), as happened in Zimbabwe and Germany this leads to a barter economy, joblessness, a collapsing economy and crime.
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james
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Post by james on Nov 26, 2016 14:37:39 GMT
their proposal is to end government borrowing. If you or I want a personal loan or a mortgage we still borrow from a bank. But why should a government have to borrow at all? If the government wants to build 20 hospitals, is it not better for the government to create the money & pay for it, rather than borrow it at interest & then have to put taxes up in order to pay for it? Of course there's an inflationary risk, but I'll take that any day over our current system. If their idea is to stop governments from borrowing there's no need to campaign against the extremely productive fractional reserve banking system that funds business growth, home building and such, all the usual sorts of highly useful things we expect in society today. If a government just creates money to build hospitals, the government is borrowing from future tax payers or instead making them pay via higher inflation. The latter effect is seen most prominently in recent history in Zimbabwe where the government adopted that practice. Advocating Zimbabwe-style economic policies makes no sense, it's a way to destroy an economy. A government doesn't need a fractional reserve banking system to do this, it can just print money. More moderate versions just create inflation at a lower level if taxes aren't raised to cover the new money cost. Of course there's an inflationary risk, but I'll take that any day over our current system. I believe sovereign debt-free money has been employed in Guernsey for the last 200 years & it seems to have worked pretty well for them. Someone seems to have been lying to you. Guernsey printed money to create it then raised taxes to destroy it again. And that's the choice from money printing: inflation or taxes. Hopefully the inflation alternative to taxes is obvious: if everything in the country is worth £100 and a government prints an extra Pound, the value of everything in the country hasn't instantly gone up, the money is just worth about 1% less than it was before. That lower value money can be used for productive things like building homes or businesses that eventually increase the total value of the things in the country and reverse the inflation effect. It's for this reason among others than inflation of about 2% is a common target: enough to stimulate the useful things but not so high that it produces runaway inflation. That's also the nature of the indirect link between economic growth and money creation, since if well balanced the money being created is just about keeping level with the growth of the economy. Well, unless there's a deliberate desire to cause inflation or deflation for some reason, like perhaps reducing the real value of the debts of a highly indebted country or its population and businesses.
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