20 Jun 2012

Who could oppose debt-free money creation by governments?

In my latest video called "Some Radical Proposals for Monetary Reform", I argued that it would be perfectly possible to replace money creation (with interest) by commercial banks by debt-free money creation by governments for projects that receive overwhelming support from the public.

Who could object?

You might think that this is such an outrageously left-wing proposition, that of course, all right-wing voters would have to be opposed. But is that really the case?

Remember that what I am proposing includes the following:
  • Abolition of income tax
  • Abolition of business taxes (eg. corporation tax)
  • Abolition of sales taxes (eg. VAT)
  • Abolition of employment charges (national insurance, pensions contributions, health care charges)
These taxes would not be necessary because the government would pay for all the usual activities normally covered by tax income with direct money creation. Only the variable rate Financial Transaction Tax would be needed to remove excess money in the system.  I note that a few additional taxes could be retained because they are good for people - taxes on alchohol, tobacco, petrol etc.

Surely, this is as close to an extremely right-wing platform. Even the Tea-Party fanatics should love it.

But there's another point. If you are a business leader, and you want to make maximum profit, then you want your salary costs and other costs at a minimum.  Note that the elimination of income tax and employment charges already means that you can pay people less. But in addition, if the public money creation mechanism can be used to provide many of the vital services that your employees need, then this would again reduce the amount that you would have to pay. For example, imagine how useful it would be if
  • your employees could get to work using efficient, cost-effective, and potentially free public transport
  • the shift to public transport means that your employees can get to work without getting stuck in traffic jams
  • your employees could get reasonably priced or even free child care for children from 6 months old
  • a shift to publicly provided childcare services means that there is little risk of employees failing to come in because of problems with nannies and so on. 
Surely, every company director should find such a move extremely beneficial. It's services that they do not have to provide, and that would make the country that implemented such a system far more competitive. Sure, there are some companies that provide bus transport for their workers, and on-site child care facilities. But it must surely be more intelligent to have those facilities provided directly for all the public - thus liberating companies to do what they are supposed to do, namely, making a profit and providing good jobs for people.

So, if all the general public approve, and it's massively in the interests of business, who could possibly  object?

The answer is simple. It's the financial system that currently is milking the entire economy for all it is worth. It's the "blood sucking vampire squids" than control everything, including politicians who are paid to protect their interests, and the media.

These ideas have to be discussed openly. I cannot believe that the bankers can give good reasons for keeping the system as it is.

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