The Telegraph:
One could slash private debt by 100pc of GDP, boost growth, stabilize prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined.
One could slash private debt by 100pc of GDP, boost growth, stabilize prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined.
The conjuring trick is to replace our system of private bank-created money --
roughly 97pc of the money supply -- with state-created money. We return to
the historical norm, before Charles II placed control of the money supply in
private hands with the English Free Coinage Act of 1666.
Specifically, it means an assault on "fractional reserve banking".
If lenders are forced to put up 100pc reserve backing for deposits, they
lose the exorbitant privilege of creating money out of thin air.
The nation regains sovereign control over the money supply. There are no more
banks runs, and fewer boom-bust credit cycles. Accounting legerdemain will
do the rest. That at least is the argument.
Some readers may already have seen the IMF study, by Jaromir Benes and Michael
Kumhof, which came out in August and has begun to acquire a cult following
around the world.