New Year Resolution – To find where money comes from!
And the how, when, where and why of our money system.
For starters; ‘Money does not grow on trees, it is easier than that.’ writes Dr Steven Hail of Adelaide University. ‘To cut a very long story quite short’, he states:
When the Government spends it creates money.
When the Government taxes it destroys money.
Government ‘debt’ should not be thought of as
‘debt’ in the conventional sense at all. It is better thought of as a form of
The Government cannot run out of money, and as
long as it doesn’t guarantee to convert its money at a fixed rate into anything
it could run out of, it faces no financial restraints at all.
However it faces real and ecological restraints,
because we can run out of people, skills, technology, equipment infrastructure,
natural resources and ecological space.
The Government is NOT a household and NOT a
business, and has nothing at all in common with a household or a business where
financial matters are concerned.
‘Understand all of this and I think it will change your perspective on many things.’ offers Dr Hail. (Especially on the wisdom and ethics of PMs and Treasurers – the ones in the limelight or shadow ones! CC)
These quotes are from his paper, ‘Paying for public services in a monetary sovereign state’ published in the journal of the Economic Reform Australia, Nov/Dec 2016 issue and available online on the ERA blogsite, era-blog.com and on this blogsite - which is the more digestible version for lay people
Go to it! Dr Hail’s, ‘very long story’ is well argued, and very readable and informative.
This writer believes it is important for citizens to seek a greater understanding of our monetary system* because it is now such a major feature of our lives and politics. Indeed continuing public ignorance will allow our politicians and their friendly interviewers to browbeat us into accepting needless austerity and cuts to important services.
Follow your resolution and you will come to perceive how superficial – if not downright misleading - are the questions and responses given in the mainstream media on treasury matters.
* Professor Thomas Picketty, author of Capital in the 21st Century, speaking on ABC Lateline last October whilst visiting Australia
“There are always a different solution to every problem and I think in the end what is key, the democratisation of economic knowledge to which I am trying to contribute can also contribute to the democratisation of society and if people are more active citizens, it can feed into more noble forms of political mobilisation which in the end can make a difference.”
Or, less eloquently, Get clued up about economics and money, then get active - and we might get more decent, worthwhile politics. CC