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I am starting this discussion because I am passionate with Money creation and role of Central bank in providing
credit/money creation. What should be the role of a future CBoS (Central Bank of Scotland) or they should try to join the Euro? Until 1974 the Bank of Canada was providing Interest free loans to “municipalities”. Would this be “legal” nowdays? What are the conditions for government to borrow money from its central bank?
MMT is interesting but, in my opinion, based on wrong premisses. They assume that the central bank creates (or should create) money but in reality they borrow from the “international debt market”. Not a long read:
https://www.riksgalden.se/fi/our-operations/central-government-debt/how-does-the-government-borrow/
– I am secret so everyone can know me. First you must count every part of me, then translate those parts into signs that do not describe me. Together we are shackled, and with the sign that does not describe me you can open me up and read me as I am. People will give you their promises for me, and if wrongdoers try to take me away from you, you can find me and tell the world where I am hidden. I began as a silent speaking, a key to open every door; now that I have opened all the front doors, I am the key that locks the back doors by which the wrongdoers try to escape the scene of the crime. I am the nothing that makes everything happen. You don’t know me, you don’t understand me; and yet still, if you want justice, I will help you find it. I am blockchain, I am encryption. I am code. Now put me to use.
— Kim Stanley Robinson (2020), The Ministry for the Future, Chapter 43
Sorry Clark
I do not understand your cryptic message!
I posted the passage because I enjoyed it when I read it; it gave me a better feel for what blockchain is than the technical descriptions I had struggled through. The role of blockchain in the book is the introduction of a new crypto-currency called the Carbon Coin – one coin issued to anyone who proves to the issuing authority that they have sequestered one tonne of carbon. But I won’t say any more because spoilers.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
This is allegedly what Henry Ford said.
Central Bank should create money not private banks. If most of the money is created out of thin air and they make a huge profit something is wrong. We as society are supporting parasitic/financial sector of the economy. Should private bank risk financing purchase of a flat and owning it in worst case scenarios or risk investing in enterprise productive economy.
You can not be sovereign without sovereign currency and your own Central Bank. If Scotland is part of Euro it is ECB that sets the rules about deficite and Debt GDP ratio. To my understanding Deficite should not be more than 3% and borrowing not more than 60% of GDP. LOL. My gut feeling is that most of the countries are above 60% ratio and some are borrowing more than 3%. Is there any empirical evidence that 3% deficite is OK but 4,5,6,7or 8% is disaster?
What is the evidence that 2% inflation is good (for Central Bank to aim for) but again anything above that 2% is disaster? Sure high inflation could trigger a viscious spiral and chaos and instability. What is high inflation?
What I am trying to say is that Scotland without its own Central Bank will be under the arbitrary rules of ECB and International finance rules.
