thegreatdivide
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(continued, from the linked article)
Money creation
A key point of Finding the Money is governments, and banks for that matter, create money. Governments by spending, banks by lending. Additionally it argues government taxes "destroy money," which is probably something those of a libertarian bent could agree with.
We certainly witnessed money creation in the Reserve Bank's efforts to prop the economy up during the pandemic.
When Covid-19 hit in March 2020, tipping the world into massive economic disruption and uncertainty, the Reserve Bank embarked, for the first time, on quantitative easing, or QE. This saw the Reserve Bank buy about $53 billion worth of government and local government bonds from a range of banks with newly created money. Additionally home lending banks were able to access $19 billion of three-year money priced at the Official Cash Rate, just 0.25% for most of the period, through the Reserve Bank's Funding for Lending Programme.
The Government hadn't first raised taxes or embarked on bond issuing programmes to fund these central bank initiatives. So if money can be created, or printed, to buy government bonds or be provided for banks to lend, surely it can also be created to do other things?
On the issue of banks creating money (when they lend):
As for banks, the film argues private banks create money, rather than the conventional idea they lend other people’s money, and this can also add to inflationary pressure.
If banks lent other people’s money; "we wouldn’t get global financial crises, we would not get speculative bubbles in housing," Wray argues.
Note, just as private banks create money 'out of thin air' when they write loans in the private sector, currency-issuing governments can be authorized to create money out of thin air when they spend money on available goods and services, to fund public sector policies (educarion, health, housing, infrastructure, research).
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