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Create money democratically and use it for public investment

January 18, 2012

In December Charles Bazlinton wrote to the Financial Times about Martin Wolf’s comment on “quantitative easing”.

Mr Bazlinton notes that the hope that the cash received would somehow translate into new bank lending has not been fulfilled, and quotes Martin Wolf: “The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.” He asks:

“When is the penny going to drop with the coalition government so that a public agency is set up to direct newly-created money to productive, non-inflationary purposes? The creation of such money used for new infrastructure in particular could be issued debt-free and interest-free.

“Why on the one hand do we ask private banks to provide loan funds, at interest, for public investment, but we do not ask the government to direct some of the Bank of England’s new money, debt-free, directly into such investment?

“Our current system benefits private banks, but burdens us with taxes. Surely we are missing two great opportunities: to make money creation democratically accountable and, when used for public investment, debt-free?”

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