These 5 Rebel Movements Want To Change How Money Works
(Source: huffingtonpost.com)

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(Original link: huffingtonpost.com)

IMPACT 09/14/2018 10:12 am ET Updated 1 hour ago These 5 Rebel Movements Want To Change How Money Works A new wave of agitators in the realm of monetary systems has emerged. By Brett Scott There have always been movements with dissenting views on the money system: how it runs and whom it works for. But in the aftermath of the 2008 financial crisis, a new wave of money agitators has emerged, each with very distinct ideas about what money means. From bitcoin evangelists to advocates of modern monetary theory, they have divided into warring factions.
To understand them and what they’re fighting for, it’s important to understand the system they’re challenging.
Our money system is underpinned by national central banks and treasuries that issue foundational “base” money . This includes the physical cash in our wallets and also reserves, the special forms of digital money that commercial banks hold in their central bank accounts, which are inaccessible to us.
These commercial banks then boost the money supply by issuing a second layer of money on top of the central bank money layer, through a process called credit creation of money (sometimes called “fractional reserve banking”) to create commercial bank money, which we see as bank deposits in our bank accounts.
The details are subtle and complex ― especially at the international level ― but the interaction of these players issuing money and taking it out of circulation makes the money supply expand and contract as if it were breathing. Monetary reform groups target different elements of this. Here are five of them.
1. Government Money Warriors Tom Williams/CQ Roll Call via Getty Images Stephanie Kelton, professor of public policy and economics at Stony Brook University, is one of the leading lights of modern monetary theory. We say that the sun rises, but in reality the sun stays fixed and the illusion of sunrise is created by the Earth turning. Modern monetary theory argues that a similar delusion occurs in our thinking about government money ― we often claim that a federal government “raises money” through taxation and then spends it, but actually it is government institutions that originally issue money by spending it into existence and then withdrawing it from circulation by demanding it back in taxation. If the government issues money, then why would it have to raise money by asking for it back?
The idea that a federal government can run out of money like an ordinary household or business is an illusion, argue advocates of modern monetary theory. A government can only run out of money if it either does not issue its own sovereign currency (like the European nations, which have opted for the euro) or if an artificial political limit has been placed on how much money it can issue. In the latter situation, governments must first recall money via tax (and other means) before reissuing it elsewhere.
This is why modern monetary theory advocates are incredulous about conservatives who want to block spending on education and health care by saying we don’t have the money to pay for it. “Governments with monopoly control over their currency can always pay for their policy priorities,” says Pavlina Tcherneva , an economics professor at the Levy Economics Institute at New York’s Bard College.
Under modern monetary theory, if there are unemployed people who want to work and material resources for them to work with, a federal government can issue new money without causing inflation because the increase in money supply will be met with an increase in production. “The goal is to use the public purse to serve the broad public interest without accelerating inflation,” said Stephanie Kelton, professor of public policy and economics at Stony Brook University and former senior adviser to Sen. Bernie Sanders (I-Vt.).
2. Bank Money Reformers Jaroslav Frank via Getty Images Bank money reformers want to target the powers of commercial banks to create money. Other reformers target the commercial bank money system. They argue it creates economic instability, over-indebtedness and concentration of power in the hands of banks ― the very banks that led us into the 2008 financial crisis.
Bank money reform groups include the American Monetary Institute , Positive Money , and the International Movement for Monetary Reform .
Commercial banks create new money when they issue loans. The moderate wing of the bank reform movement argues that, because the government grants them this privilege, banks should be subject to greater democratic scrutiny over their lending. The hard-line wing believes bank creation of money should be banned altogether.
The movement to curtail bank money is politically more diverse than modern monetary theory; it’s been supported by certain libertarians, including the late economist Murray Rothbard , neoclassical economists such as Irving Fisher , as well as left-wing proponents, such as the U.K.’s Green Party, which believes bank money-creation leads to environmental c...

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