Why Can't the Government Create Money? Watch

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The_Mighty_Bush
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#21
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It already does on a massive scale and has for a hundred years in the United Kingdom.
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MouseyBrown
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#22
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Can somebody please correct me if I'm wrong, but can the BoE not already print money? That's essentially what quantitative easing was, except nothing actually gets printed. This can now be done because we are not in the gold standard anymore.

Banks cannot create money from nothing.
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Polymath0
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#23
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(Original post by Maker)
Govts do creat money but all they create is debt, have a look on a UK bank note and its says right on the note its an IOU.
Did you miss the evidence I provided to the contrary in the opening post? The Bank of England itself says that private banks have the power to create money. The government borrows money; it does not create money.

The fact that an IOU is present on the banknote ought to be an indication in itself that all money is issued as debt by private banks.
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The_Mighty_Bush
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#24
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(Original post by Quady)
And do you know why it wasn't inflationary?
It was by definition. That's what inflation means = an increase in the money supply. Rising prices is only a common consequence of inflation, not inflation itself.
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Polymath0
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#25
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(Original post by The_Mighty_Bush)
It already does on a massive scale and has for a hundred years in the United Kingdom.
I'm not going to bother engaging with those who clearly haven't read the opening post. It wouldn't be meaningful.
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Polymath0
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#26
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(Original post by MouseyBrown)
Banks cannot create money from nothing.
“The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.” FT, 9th Nov 2010
Martin Wolf.




http://www.positivemoney.org/2010/11/martin-wolf/
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Quady
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#27
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(Original post by Polymath0)
It did inflate asset prices in the financial market, benefiting the already wealthy at the expense of the majority of the populace.
But why wasn't it inflationary?

How was it at the expense of the populace?

Is someone who invests in NEST wealthy? :P
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AsandaLFC
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#28
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This is a very good question

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The_Mighty_Bush
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#29
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(Original post by Polymath0)
I'm not going to bother engaging with those who clearly haven't read the opening post. It wouldn't be meaningful.
I did but you are just wrong.
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Maker
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#30
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(Original post by Polymath0)
Did you miss the evidence I provided to the contrary in the opening post? The Bank of England itself says that private banks have the power to create money. The government borrows money; it does not create money.

The fact that an IOU is present on the banknote ought to be an indication in itself that all money is issued as debt by private banks.
What evidence, your OP is so long I grew a beard just trying to read it.
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Quady
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#31
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(Original post by The_Mighty_Bush)
It was by definition. That's what inflation means = an increase in the money supply. Rising prices is only a common consequence of inflation, not inflation itself.
Was there any increase in the money supply? I thought the BoE bought money with money...
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saayagain
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#32
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(Original post by Polymath0)
How can debt-free money debase the currency? If the private banks can issue money out of nothing and lend to the government without debasing the currency, why can't the government do the same? Why can't the government create money for itself via the central bank?

The issue at heart is the debt-based monetary system. Without the government needing to go into debt, people would no longer have to pay taxes. The government would be able to finance public services without creating a debt.
The value of your money decreases. Without wage increases and interest on savings, your money doesn't keep up with inflation which is caused by excessive money creation. If you took all your money out of the bank and kept it in a box for one year, your money would have devalued.

The government will encounter the same problem unless it finds a way to control the total money supply i.e. allocate it via debt or extract money via tax. That's why I advocate a debt based interest free money supply, purely for financial management purposes.

Also, those do not receive the debt free money will find that their money is devalued unless their money keeps up with the rate of devaluation of the currency.

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saayagain
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(Original post by Polymath0)
“The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.” FT, 9th Nov 2010
Martin Wolf.




http://www.positivemoney.org/2010/11/martin-wolf/
I knew positive money inspired you lol
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missfats
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#34
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refer to Germany in the 1918 until early 20s

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The_Mighty_Bush
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#35
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(Original post by Quady)
Was there any increase in the money supply? I thought the BoE bought money with money...
Yeah there was. An absurd idea really. The idea that deflation is the worst thing in the world just isn't true.
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SiminaM
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#36
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]Panic of 1819. Wiki it. Same principle: let's make money so what if the treasury doesn't cover it? Big deal it's only paper.

Ummm.... NO! You can't just 'create' money...

Edit: for ex: if a country has 200k worth of gold in its tresury than it cannot release more than 200k paper money. The money must have an actual value which is insured by the country because there is an equal worth of gold.
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Quady
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(Original post by The_Mighty_Bush)
Yeah there was. An absurd idea really. The idea that deflation is the worst thing in the world just isn't true.
Could you demonstrate the inflation?

Japan is a happy swinging, free loving place then? Way better than the 80s?
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Quady
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(Original post by SiminaM)
]Panic of 1819. Wiki it. Same principle: let's make money so what if the treasury doesn't cover it? Big deal it's only paper.

Ummm.... NO! You can't just 'create' money...

Edit: for ex: if a country has 200k worth of gold in its tresury than it cannot release more than 200k paper money. The money must have an actual value which is insured by the country because there is an equal worth of gold.
No downsides with the Gold Standard? Why'd we ever move off it I wonder...
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Commercial Paper
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#39
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(Original post by Polymath0)
Monetary and fiscal policy would be independent. The Monetary Policy Committee at the BoE would determine how much money to create in line with inflation rates. The interest rate mechanism can be abolished.
This has been tried before and it was a disaster hence why it was abolished. Targeting money supply growth rates do not work that's why the BoE now targets inflation.

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SiminaM
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#40
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(Original post by Quady)
No downsides with the Gold Standard? Why'd we ever move off it I wonder...
The amount of issued money must be controlled. Otherwise it would be so easy for governments to 'create' empty money and solve all problems. It would be a hysteria. Maybe it's not perfect but it is as good as it gets right now.
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