Why Can't the Government Create Money?

1. Reassert dogmatically the position that money can't be but debt without reasoning and / or evidence.
2. Resort to abuse and insult.

I rest my case. This thread is done for trolls like yourself, not for sane and serious contributors.

Ignored.

I asked whether or not the government can create debt-free money, not how they spend debt-based money.

That is the way i understood the system, if i am wrong then kindly tell me what is the right concept.

You have offered absolutely zero evidence or explanation of your assertions in this entire thread. I and several others have explained with incredible patience exactly how and why you are mistaken, but you have refused to engage with the discussion.

It's gibberish to you because you have no understanding of how money is created and issued. It's a shame you have to resort to antagonism rather than simply ask for further clarification. I try to avoid engaging with those who are mentally unhinged but I am rational and humble enough to give second chances.

The Sovereign Money system seeks to withdraw from private banks the power to create money and return it to a public body for the national interest. It wants to redefine money so that it is no longer created as a debt by the private banking system. This is primarily because under the current system, money exists as both private debt and a means of payment. The compulsory identification of money and debt just creates banking-doctrinal confusion. It confuses the instrument with the object, i.e. it erroneously identifies the unit of account with what is accounted or measured, and confuses the means of payment with what has to be paid. The creation and issuance of money can, but need not, involve a financial transaction of lending/borrowing and redeeming. To maintain that debt can only be repaid with debt (a logical implausibility) ignores or misrepresents 2,500 years of coin currencies when new, additional money typically was not loaned into circulation against interest, but spent into circulation debt-free by the rulers who had reserved for the state the monetary prerogative of coinage and seigniorage.

Cut and Paste job? [fallacy]

This is just hilarious. You don't know the first thing [insult] about monetary economics and you're using all these words you don't even know what they mean. [presumptuous and arrogant]

It really is gibberish [assertion] I'm afraid. Why don't you try and read up on the subject [presumptuous] a bit more before continuing - if you want something explained, just ask in the economics forum and I or another economist will try and help.

no-one can create debt-free money, because its a logical contradiction. The creation of money automatically involves the creation of an equal and opposite amount of debt.

Because in that case it could abuse that power and bring rampant inflation .. by releasing bonds it will be more careful of how much it spends because of the fear of unsustainable debt

This is merely a product of your imagination. The matter is precisely in the inverse. I have asserted nothing. You have been reasserting dogmatically that "money cannot be anything but debt" and refused to engage with the counter argument. Instead you choose to ignore the substance, act arrogantly presumptuous about another's knowledge base, and fallaciously maintain that one's content is not valid and legitimate if a piece of research has been presented in its original format. E.g.

Your reply: [with evidence of my legitimate accusations against you highlighted in brackets]

Why is this thread 16 pages?!

Lets start with the very basics. Imagine we live in a world without money. Everyone just barters for their goods.

Explain to me, in the simplest possible terms, how money might be created in this world.

The government, in fact, does not have all the money it needs because it has no control over the money supply. It must be borrowed at interest from a pool of money originally newly created by private banks, again in the form of debt.

To avoid the coincedence of wants, a monetary system would need to be introduced in order to faciliate the exchange of goods and services with a flexible means of payment. It would necessarily need to be flexible since the money that enables economic transactions would, in turn, have to facilitate the growth and development of society.
The governing body of society would use the privilege of money creation to cater to the various demands of its electorate without needing to accumulate debt or impose inefficent taxes. Through the democratic issuance of money, which would be spent and not lent, the government would create the demand required for a strong and successful private sector. The government could create an ideal society envisioned by both capitalism and socialism, but without their respective disadvantages. The private banks would loan already existing money whose primary allocation began through debt-free government expenditure for the public interest.

Let me know if you wish for me to expand on any point.

Really? You're claiming the Bank of England has to borrow money from private banks?

Below is a quarterly report published by the Bank of England entitled "money creation in the modern economy." It explains by what mechanism money is issued and the role of the central bank in such a process. I am sure you will concur that an explanation of how the banking system operates cannot get more authoritative than this.

Two misconceptions about money creation
The vast majority of money held by the public takes the form of bank deposits. But where the stock of bank deposits comes from is often misunderstood. One common misconception is
that banks act simply as intermediaries, lending out the deposits that savers place with them. In this view deposits are typically ‘created’ by the saving decisions of households, and banks then ‘lend out’ those existing deposits to borrowers,for example to companies looking to finance investment or individuals wanting to purchase houses. In fact, when households choose to save more money in bank accounts, those deposits come simply at the expense of deposits that would have otherwise gone to companies in payment for goods and services. Saving does not by itself increase the deposits or ‘funds available’ for banks to lend. Indeed, viewing banks simply as intermediaries ignores the fact that, in reality in the modern economy, commercial banks are the creators of deposit money. This article explains how, rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of thesequence typically described in textbooks.(3) Another common misconception is that the central bank determines the quantity of loans and deposits in the economy by controlling the quantity of central bank money— the so-called ‘money multiplier’ approach. In that view, central banks implement monetary policy by choosing a quantity of reserves. And, because there is assumed to be a constant ratio of broad money to base money, these reserves are then ‘multiplied up’ to a much greater change in bank loans and deposits. For the theory to hold, the amount of reserves must be a binding constraint on lending, and the central bank must directly determine the amount of reserves. While the money multiplier theory can be a useful way of introducing money and banking in economic textbooks, it is not an accurate description of how money is created in reality. Rather than controlling the quantity of reserves, central bankstoday typically implement monetary policy by setting theprice of reserves — that is, interest rates. In reality, neither are reserves a binding constraint on lending, nor does the central bank fix the amount of reserves that are available. As with the relationship between deposits andloans, the relationship between reserves and loans typically operates in the reverse way to that described in some economics textbooks. Banks first decide how much to lenddepending on the profitable lending opportunities available tothem — which will, crucially, depend on the interest rate set by the Bank of England. It is these lending decisions that determine how many bank deposits are created by the banking system. The amount of bank deposits in turn influences how much central bank money banks want to hold in reserve (to meet withdrawals by the public, make payments to other banks, or meet regulatory liquidity requirements), which isthen, in normal times, supplied on demand by the Bank of England. The rest of this article discusses these practices inmore detail.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

"The governing body of society would use the privilege of money creation"

Can you explain what form this money would be and what value it would have?

It would be standard fiat money, its value ordained by the productivity of society of which it facilitates. When there is a demand it would be supplied directly. Inflation would not result as demand increases alongside supply.

Rather than cutting and pasting me stuff I have read many times before, I want YOU to answer the question in your own words.

Then I need you to quote the bit in the text that you have difficulty understanding. I have no difficulty understanding it, so I can edify you.

I'll repeat the question:

Do you think the Bank of England has to borrow money from private banks?