Ole Bjerg is an Associate Professor of Copenhagen Business School. He identifies beautifully the critical aspects of the creation of money:
- the difference between
- Paper Money [Cash – about 5% of the money supply] and
- Electronic Money [Credit – about 95% of the money supply]
- the negative consequences:
- instability
- banks issue money when the economy is booming and hold back otherwise;
- inequality
- interest is a ‘tax’ on money
- with growing inequality based on the level of interest rates
- concentration of power
- how much money?
- at what price?
- for what purpose?
- instability
- Hence politicians appear to be impotent, as decisions are made in board rooms of banking institutions – outside democratic institutions.
- the smart solution is an update of what Central Banks do with respect to PAPER money to INCLUDE electronic money;
- all citizens should have accounts with Central Banks!
- Commercial banks continue to
- take deposits and lend it
- as a LINK between people who save and who borrow.
- the smart solution is an update of what Central Banks do with respect to PAPER money to INCLUDE electronic money;
- This is a SOVEREIGN system of money creation – reminding citizens to
- understand the creation of money
- participate in the political process of deciding WHO creates money.
In the Spirit of the Forum for Stable Currencies