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CURRENCY What If We Adopted a System Where the Banks Did Not Create Our Money?
What if there was a financial system that would: eliminate the need for governments to go into debt; eliminate the need for central banks; end the practice of fractional reserve banking; and dethrone the big banks?
A new IMF paper, “The Chicago Plan Revisited,” suggests that the world would be better off if we adopted a system where the banks did not create our money. Instead of a system where more money is only created when more debt is created, we would have a system of debt-free money that is created directly by national governments.
One fundamental problem with the current financial system is that it is debt-based. The vast majority of all money is ‘created’ either when governments or individuals borrow money. Thus, the creation of more money creates more debt. So it’s not surprising that US debt today is more than 30 times larger than it was just 40 years ago.
It doesn’t have to be this way. There is an alternative: National governments can directly issue debt-free currency into circulation.
The current system is designed to enrich bankers and get everyone else into debt. Taking the ability to create money away from bankers would have some tremendous advantages. The transition, however, would be a major shock to the global financial system, and the world’s bankers will move heaven and earth to keep a debt-free monetary system from being implemented.
The bottom line: We do not have to allow the banks to create our money; the federal government does not have to go into more debt; we don’t need central banks; there are alternatives to federal income tax.
Somebody out there should be proposing a fundamental change in direction for our financial system. Unfortunately, our politicians are just proposing more of the same.