Friday, 8 June 2018

Jeremy Warner's odd ideas on Vollgeld / Sovereign Money.

Jeremy Warner in the Daily Telegraph has two objections to Vollgeld / Sovereign Money. One is that V/SM apparently involves politicians being in charge of money creation (his 5th last para). Had he actually bothered reading Positive Money’s proposals he’d have discovered that it is the central bank (or some other committee of economists) that decides how much money is created. I.e. under V/SM it’s the central bank that has the last say on how much stimulus is implemented, which is no different to the EXISTING system! As to how much is loaned, that is left to commercial banks.

His second objection is that the switch to V/SM would involve disruption. Well Milton Friedman (a supporter of V/SM) said the disruption would be minimal. But in any case, if something has long term benefits, it is worth doing even if it involves temporary disruption. Assuming (big assumption of course) Brexit brings long term benefits to the UK, then the disruption caused by it will eventually pay off.

The title of Warner’s article is “Nationalising money is  an odd way to fix markets”.

P.S. To add insult to injury, another vociferous opponent of V/SM is Ann Pettifor, but one of her main objections to V/SM is the fact that central banks determine how much money is created: i.e. she prefers a more democratic system, e.g. having politicians having a say in the matter.

Perhaps Warner and Pettifor could get together and sort that one out......:-)

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