By Alistair McConnachie
It is our debt-based economic system which is driving the unsustainable growth which leads to resource depletion, environmental destruction and man-made climate change.
It is the debt-based nature of our money supply which drives this need for “growth”.
This is because it is the debt in the system which institutes an intrinsic inflationary imperative into the economy, driving itself, and us, recklessly onward.
For example, debts for industry mean that industry has rising costs of production and has to raise its prices.
Debts for individuals mean less disposable income, depressing consumer spending power, leading to wage demands.
Systemic debt in society tends to constantly work to push costs and prices upwards, disposable income downwards and wage demands upwards.
And the only way the economy can try to meet these demands is to keep growing and growing.
The economy has to keep growing to meet the demands of these debts.
Debt is to the economy as high-octane fuel is to a jet engine. But this is not jet-propelled growth, its…
Endless debt leads to endless pressure for endless growth.
To summarise, when money is being created as a debt at its point of origin, then it will feed into other debts throughout the economy and require more people and businesses to go into debt to service them, which leads to another increase in the debt-based money supply, which leads to more people and companies acquiring debt, and so on and on.
A money supply based on debt is compelled to keep growing unsustainably like a vicious Towering Inferno. And like Steve McQueen’s character, Fire Chief O’Hallorhan said in that film: “It’s out of control, and it’s coming your way!”
TWO MONEY REFORM PROPOSALS to PROMOTE PUBLICLY-CREATED, DEBT-FREE MONEY
To stop the Debt Driver which propels us towards endless growth, we need to switch from the privately-created, debt-based money supply, which we have at present, to a money supply which is either largely or wholly publicly-created, debt-free.
Either reform would ensure that the debt-free money would tend to neutralise the effects of the debt-based money. This would lower debt levels in society and reduce the negatives associated with systemic debt.
Michael Rowbotham’s reform, promoted in his book, The Grip of Death is intended to move the money supply to being largely publicly-created:
1. Commercial banks are allowed to continue creating credit. No legislation is needed to change their status.
2. The State — via an independent public body — creates and spends into society a certain amount of debt-free money each year, allowing the public purse to benefit from the seigniorage on the amount created.
3. The amount of debt-free money supplied to the economy would match the net growth in debt per year.
Joseph Huber and James Robertson’s reform promoted in their book Creating New Money differs from the Rowbotham reform in that it is intended to move the money supply to being wholly publicly-created:
1. Forbid private banks to create money.
2. An independent public body — a branch of the Central Bank — creates all the money debt-free, on a regular basis.
3. Government spends this money into society via its spending projects.
4. It is this money which private banks compete to attract into their savings accounts, in order to lend out to their customers.
The Huber/Robertson reform seeks the full social ownership of the power to create money.