I try to refrain from insulting authors, but this is malarkey from top to bottom. As most who aren’t happy with the outcomes of our economies (The UK is very similar to the US in its monetary system structure.) you propose some far out plan that would destabilize the global economy as the best way to “solve” a problem you don’t understand and may not even exist. Did it occur to you that everyone’s money would increase in value, causing prices to follow? What does it gain for anyone to create a situation that, at best, preserves the domestic status quo and makes offshoring of production more profitable?
Firstly, money is not, nor ever was, an outgrowth of barter. Money is a product of states needing to provision themselves to create armies to defend territory or expand what territory they control. Money is introduced by the state as a tax levy that must be paid in a denomination only the state can create. As soon as it does so, the state causes everyone to be unemployed until they can secure enough of the state’s currency to satisfy the tax obligation.
If the state spends more of its currency into existence than it taxes back it creates a common currency of trade that draws resources into the economy where they can be purchased. The government is always the price setter and controls the economy between its spending and taxing, but the spending must always precede the actual collection of taxes, or there is none of the state’s currency available to collect. Why would the monopoly issuer of currency ever need to obtain its own currency back to enable it to spend?
Neither taxes nor borrowing has ever funded any government using a paper currency (now digital), even those witch pinned their currencies to a commodity or another state’s currency. When the first paper currency was introduced in the colonies for domestic trade the taxes collected were burned in a ceremony in the public square to prove to the people they were destroyed and not absconded by officials or recirculated off the books to boost local economies for political purposes. Both only draw down currency in circulation to keep the government in the position of price setter by making the tax sufficiently difficult to satisfy.
You, like most not familiar with our monetary and reserve banking system make assumptions that relate to your own experience as a “user” of the currency and transfer that experience onto the “issuer” of the currency. This is quite common, sadly even among many of those who are responsible for government’s spending, which is how we are so easily manipulated into cheering against our own best interest. Positioning capital as the origin of money in the economy, and government as a competing “user” that must take a portion of our national currency from us to function is the root cause of most of our economic problems and extreme inequality.
The truth is that the only source of net black ink the private sector has is the red ink of the government. Banks do not actually create “any” money in net accounting, and they haven’t even used fractional reserve lending since ’34 in the US when we abandoned the domestic convertibility of currency to gold.
They now simply create “credit accounts” for qualified borrowers as “assets” on their books and the central bank “lends” the lender bank reserves to facilitate accounting and enable interbank transfers. This positions those reserves as “obligations” of the lending bank that are paid as the borrower makes the principal payments, always keeping a balance between assets and liabilities until all of the reserves lent to the lending bank by the central bank are repaid. Since this repayment requires public money to retire private debt there is no new money created.
If the government doesn’t inject enough of its own currency into the private sector to allow private debt to be retired in a timely manner the economy must continually grow at a rate that allows debt to be “rolled over” into new lending, or suffer from mass defaults. This is literally the definition of a pyramid Ponzi scheme if the borrower isn’t offered some means of retiring that debt. With the currency drains of extreme wealth accumulation and trade deficits added to the need to fund economic and population growth the government should almost always spend in deficit, just to keep the economy even. With the economic illiterate calling for balanced budgets, making them the holy grail of pandering politicians, its easy to see why we suffer bubbles and busts.
The biggest economic myth hoisted on the people is the concept of a state with its own currency that can create it on demand ever having to “borrow” that currency to spend new currency. Without a gold reserve or exchange rate to defend, there is absolutely no useful purpose to government issued bonds except to provide welfare to the already wealthy who can purchase them. Since they require excess (above taxation) reserves to purchase, and those can only result from the government deficit spending, it is government spending that “funds” bond sales, not the other way around.
The government literally creates money, hands it to some wealthy first trader or bank, and then trades it back for paper that pays interest. Bond traders then shuffle those pieces of paper around to create profit via gambling on furure bond issues. Nice work if you can get it, right? If you ever want to know how much money is in circulation (net after bank debt is accounted for) simply look at a nation’s national debt. It represents all currency ever created that hasn’t yet been destroyed/balanced to zero by taxation.
We have all of the tools we would ever need to finance a healthy economy that works for everyone. We just need to stop being stuck on stupid and demand that our elected officials manage the economy in reality, not popular myths and propaganda supported for the oligarchs. “ANY” suffering in any modern economy is strictly a political decision, not economics. Our governments can afford anything that is priced in the currency they can create at will, including the excess labor the private sector rejects.
