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Petitioning The British Government

Governments To Issue Debt-Free Money Instead Of Borrowing From The Banking System

Broadly speaking, governments can finance their spending in one of three ways: they can tax from their citizens (including businesses and corporations); they can borrow at interest from the banking system and other entities including individuals; they can create their own money by printing notes, minting coins or simply issuing credit. In practice, they tend to do all three, but taxation reduces purchasing power thereby slowing the economy; borrowing requires repayment at a later date with interest; on the other hand, creating money directly involves only the cost of the note or coin issue, while issuing credit (electronic money) is virtually costless.

The usual objection to a government issuing its own credit is that it will issue so much that money becomes worthless. This objection is facile. In 1937, the Australian Royal Commission recommended the Commonwealth Bank create all the credit the Government required debt-free (interest and principal). In December 1981, the Economic Research Council recommended that the Treasury should issue credits to the Bank of England thereby avoiding the necessity of borrowing from the banks.

In this modern age it would be perfectly feasible for experts to calculate how much money the Government required and could issue without debasing the currency. It does not make sense to pay for something when you can get the same thing absolutely free. Furthermore, if governments issued all their own credit, taxation would all but disappear. The only “losers” if this were to happen would be the speculators and other financial parasites, like those involved in the current LIBOR fixing scandal.

 

 

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