Friday, February 15, 2013
Roger Boyd- Independent researcher and former Vice President, Capital Market Systems, at Bank of Montreal Patrick Conaty- Research Associate at Community Finance Solutions at the University of Salford, Research Associate with Co-operatives U.K. in Manchester and Senior Fellow of the new economics foundation in London
Money is created by commercial banks. Nowadays, this money is not backed by assets; rather it is debt-based. Fundamentally, banks profit out of something literally created out of thin air by charging interest on loans.
Problems arise when money creation is dependent upon lending. New loans have to constantly keep increasing to keep the money supply growing. Effectively, the charging of interest by commercial banks creates a tax or “rent” to the rest of society, increasing costs and transferring wealth from the less wealthy to the creditors (the more wealthy). In this system often-times losses are socialized and profits are privatized. Furthermore, subsidies to the commercial banking system prevent these organizations from going bankrupt creating the “too big to fail” dilemma.
It is important to recognize that the state has the underlying right to create money. Money could be issued by the government or an independent entity which has specific rules around how that money is issued. Money can also be issued by local communities as well, which is not debt based money.
Given these considerations, is it possible to create money in a different way?
Download Presentation PPT file: BALTA Finance Cluster Meeting Feb 15th