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Escaping Growth Dependency: Positive Money

May 1, 2018

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Positive Money campaigns for reform of the monetary system – taking away the power of private banks to create money through making loans – and instead bringing in a system of sovereign money creation in which the government creates money and spends it into the economy. 

The focus is on how the current monetary system creates high levels of public and private debt, which are only manageable if there is ecologically unsustainable economic growth.

Chapter 3 of its latest report explains how private banks create money to finance the purchase of assets, especially property, inflating the price of housing relative to earnings.

The conclusion is that high debt, in the current monetary system, is incompatible with a zero-growth or steady-state economy.

Positive Money proposes a sovereign money system involving the Treasury issuing non-interest paying bonds which are purchased by the Bank of England using money created for that purpose.  These payments would be credited to the government’s account, to be spent into the economy.  This debt-free money could reduce the amount of private and public debt, leading to a more stable economy.   

The New Economics Foundation argues that money does not arise naturally from the workings of the market but is brought into being by governments through their requirement that it be used to pay taxes.

It could therefore be constructed differently, bringing in restrictions on the amount of interest that can be charged and controlling the amount of credit that can be created for particular activities:

  • money could be directed towards investment in a zero-carbon future;
  • its creation for speculation prevented
  • and controls brought in over international capital flows.

Such reforms would enable governments to pursue socially and environmentally economic policies which would improve the human and natural environment.

Download Full Report here. 

Read Positive Money’s latest news here.

 

 

 

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