Sunday, 17 June 2018
Governments deprive people of money so that people then have to borrow from private banks.
The reasons for the above are quite simple and are as follows.
It would be perfectly feasible to have an economy where the only form of money was state issued money, e.g. Fed issued dollars in the US. And issuing enough of that money to induce the population to spend at a rate that brought full employment, while not exacerbating inflation too much would not be difficult: at least it would be no more difficult than gauging the right amount of stimulus under the existing system.
However, the reality is that private banks are allowed to issue money as well. But if private banks started doing that in an economy which was already in the latter full employment position, the result would be an excessive money supply: excess inflation would ensue (as indeed is explained by George Selgin - not that I’m suggesting he would agree with the basic thrust of this “Ralphonomics” article). Thus government would have to impose some sort of demand reducing or “deflationary” measure to counteract the latter excess inflation: like raising taxes and confiscating a portion of the population’s stock of money.
Thus if you’re in debt to a bank, remember that is partly because banksters have hoodwinked politicians into driving you into debt so that your bank can make money from lending to you.