5.1.1 The Divorce Between Money and State. States don't create money. Private banks do.

[BarnabyThing]

“The notion that money can be produced by an entity other than a nation-state has profound political implications. From as early as the Lydians, Greeks, and the Roman Empire, the state has been responsible for printing coinage. There have been sporadic and small incidences of the private issuance of currencies.”

Most nation states have for several decades created only a fraction, about 3% of money in circulation as notes and coins. The other 97% is created by privately owned banks as loans through computer entries into accounts. For every £1 created, someone needs to go £1 into debt.

A state’s central bank “Monetary Policy Committee” as it is called in the UK (run by the Bank of England and separate from the government) may set interest rates in order to attempt to arrest or boost lending. A government may bail out high street banks if there is a loss of confidence in a their ability to repay loans, if the whole banking system’s confidence to make loans crashes, or if there is a run on the banks or the threat of a run. But neither the state nor it’s central bank has much ability at all to constrict private high street bank’s abilities to make loans, in other words, to limit boom and bust economic cycles.

The same process applies in pretty much the same way in every nation.

Here are two Monetary Reform campaigns, one national, one global. They advocate for the proper teaching of money creation and for the democratisation of money creation - for the power to create money to be taken out of private hands and given to the state as debt free money to be spent on according to the democratic wishes of it’s citizens. The amount of money created would be overseen by a Money Creation Committee separate to the government. Under this system, banks could still make loans but they would function with full reserves, thus making loans according only to the amounts they have in their reserves. Most “monetary reformers” also campaign for real democracy as opposed to corporatocracy thus enabling voters to make wise choices as to which kind of ventures should get state funding.

https://internationalmoneyreform.org/
https://positivemoney.org/

I will think further how the section could be amended.