By James Gibb Stuart
A famous American company, in its methods-training, adopts the slogan that “There has to be a better way”, and believe me, once you have conditioned yourself to assume that this “better way” exists, it’s amazing how often it emerges.
So let that be the answer to cynicism, or defeatism, or the dispirited conclusion that nothing can be done that has not been tried before — and anything that steps beyond the bounds of the accepted economic orthodoxy is crackpotted and doomed to disaster. The problem has a solution, and it is well within the capacity of the human brain to find it.
The problem? In an economic sense, agreeing what is both socially desirable and physically possible, and making sure that it is also financially possible. If we allow ourselves to be deflected from that ideal objective, we pose grave questions about the relationship between money and mankind — about which is the servant and which is the master.
If beneficial human activity — for which unused physical resources are clearly available — is seen to be curtailed by a lack of negotiable funding, then it is surely the financial system which needs critical examination, not the reasonable demands and aspirations of the species.
Prosperity makes certain proposals. Central to these is the concept that Government can, and must, retain or restore unto itself the ability to create money.
There are illustrious historical precedents for this. Abraham Lincoln during the American Civil War. Lloyd George when British Chancellor of the Exchequer at the beginning of the First World War. And the incomparable Dennison Miller with his Commonwealth Bank in Australia, which between 1911 and 1923 stood ready at all times to bridge the gap between the financially possible and the nationally desirable by issuing debt-free money into the economy, and thereby saving Australia from the worst rigours of the 1920’s depression.
Of course, the power to create money is an awesome power, which must be used with discipline and restraint.
Here is a proposal which concentrates on that factor of the National Debt which increases from year to year because of the need to pay interest.
The fact is that we are borrowing at interest just to pay the interest on what has previously been borrowed!
It seems this is a phrase we must repeat 10,000 times before the absurdity of it will be appreciated by humanity at large. It is neither just nor necessary. It never was necessary. It has only been imposed upon the world by the machinations of powerful and influential people with a vested interest in the lending of money.
So in requesting that the Government look into its constitutional powers of money-creation, we focus initially upon one thing here: Stop borrowing money to pay the interest on the money we have already borrowed!
Let us fund the interest burden on the National Debt with publicly-created debt-free money.
This modest measure, once implemented, would allow Parliament to examine the advantages of judiciously using its powers in this direction, and pave the way for further debt reductions in the future, via publicly-created money.
The beauty of this idea is that no one can say it is “creating more money to cause inflation” because the total sum created debt-free to pay the interest to existing debt holders, will be the same as that which would have been created otherwise, as a debt. No more new money is being injected into the system.
But an important principle will have been established!
The legislation could be put through for one year only, but subject to annual renewal, and habit-forming once it gets going.
We should not be put off by technicalities or the objections of Treasury officials, who are by habit bound to the system they inherited, and will resist to the utmost any deviation from the norm.
Their established orthodoxy has nothing to offer us but more and more debt and they can, and should, be overruled by people of greater vision.
Let it be like the relationship between an architect and the technician who brings his ideas into being. Many skills are harnessed, in which he himself does not have competence, but provided he insists upon strict adherence to drawing, he will in the end have the structure he visualised, whether or not he understands the methodology involved.
The object of this article has been to offer some fresh thinking on matters in which too often the orthodox economist has been assumed to say it all.
They call his the dismal science, but it need not be, if our minds are attuned to finding that “better way”.