I support Positive Money, but their spokespeople do make one mistake after another.
If we had a money system in which governments had a sovereign control over the money supply... @ProfTimJackson pic.twitter.com/cKGKYrp1st— Positive Money (@PositiveMoneyUK) January 21, 2017
And it’s best not to make mistakes because your opponents, if they’ve got half a brain, will exploit those mistakes, though luckily for PM, it’s opponents are about as clueless as its supporters.
The above short 45 second video makes three points, all of which are flawed or least very debatable.
The video starts with the odd claim by “professor” Tim Jackson that if we had a system where only the state creates money then “it would be perfectly legitimate for government to invest” in green stuff. Well it’s “perfectly legitimate” for government to invest in green stuff even if we continue with the existing banking and monetary system!!! Indeed, governments around the world are making those investments even as you read this. Doh!
Next, it is claimed that a state money only system would reduce inflation. Well since the serious 1970s inflationary episode, inflation has been well under control – and all without a “state money only” system!
As to that 1970s inflation, that was brought to a halt by a severe limitation of the money supply which (as predicted) caused widespread unemployment. All in all, the fact that state control of the money supply enables us to control inflation is not really anything to shout about.
And finally, it is claimed a state money only system would give us a much more stable financial system. Well true, but there’s a catch. That increased stability comes from the big increase in bank capital ratios that is inherent to a state money only system: in fact that ratio is 100% and that’s overkill. To illustrate, the actual increase in capital ratios that is needed according to regulators is only a couple of percent (well they would say that, wouldn’t they). While Martin Wolf and Anat Admati (economics prof at Stanford who specialises in banking) want about 25%. But that’s all a long way from 100%. Ergo the “increased stability” point is a very poor justification for a state money only system. I.e. the justification/s lie elsewhere.