What are the arguments against?

The standard argument from the Commercial Banking sector against money creation by elected governments or public authorities such as Central Banks is that Politicians cannot be trusted with money creation. They will be tempted to create more money than they should to buy votes, and this would lead to inflation.

We are supposed to believe that somehow, money creation by Commercial Banks is somehow safer – that bankers could not be tempted to create money just for their own personal benefit.

Both these positions can be dismissed.

For example, in the N-Euro proposal, governments will only use N-Euros to pay for things such as public sector salaries, pensions and benefits that they would normally have had to pay using conventional euros.  If needed, the government could introduce an elected body to monitor all money creation using N-Euros to ensure that there was no abuse.

Secondly, the idea that bankers working for commercial banks can be trusted to only create money when it is in the public interest is simply farcical. Banks create money when they think that they can make a profit. And they will tend to inject money into parts of the economy such as mortgages that are not in the general interest because it leads to assets price bubbles that result in house prices increasing so much that few people can afford to get onto the housing ladder.

Who should use the N-Euro system?

Leave a Reply

Your email address will not be published. Required fields are marked *

Information and Forum for the N-Euro project