So, just as the government guarantees most people’s money in the bank, it also offers gilts (or government bonds) for those with millions or billions to save because they too want guarantees on their money. And they will accept a low rate of interest to get it.
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But to make sure this is clear, where does this new knowledge that comes from the very simple understanding of how money is created (not printed, or made - created is the right word) leave us?
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First, it says the government underpins the value of all our money, because whilst all money is a promise to pay, the government’s promise is the best, and our banks could not function without the support of that promise. We need to remind arrogant bankers of that, often.
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Second, whilst cash saving is important to people it’s also pretty important to realise that it is much like dead money. It is not used to fund bank lending or to pay for government spending. That does really mean the state should not be subsidising it with things like ISAs.
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Fourth, the government always spends its money, and not taxpayers’.
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Fifth, tax does not fund government spending. Tax is instead used to control inflation, redistribute income and reorganise the economy, but never to fund spending, and that’s true in any country with its own central bank and currency and that never use another country’s currency.
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Sixth, the government does not need to borrow because it can always create the money it needs on overdraft at the Bank of England.
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Seventh, the borrowing it does do is a favour to those who want to save with the government. It does never need the money people save with it.
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Eighth, that means we need never have a debt crisis. If we don’t need people’s money, because the government can always create its own, where’s the debt crisis? Especially when a government can always repay on demand, simply by asking the Bank of England to make the payment?
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Ninth, the amount of savings a government wants to accept, and the interest rate it now has to pay on it, can always now be controlled through the QE system. All this does is regulate the government backed, cash based, savings system. Nothing more, and nothing less.
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Tenth, I stress, that means all interest rates are now heavily influenced by the government and many are under its direct control. So where is the interest rate panic?
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Eleventh, inflation is not now controlled by interest rates - because we don’t want them to rise. It’s going to be controlled by tax. I admit, right now no one has an ideal tax to achieve this goal. I am working on it. It is possible. And it’s progressive, and so fair.
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Twelfth, we can have full employment at fair wages, and it pays for itself.
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Thirteenth, there is no need for austerity, at all in that case.
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Fourteenth, please go and talk about this. By really understanding something as simple as how money is created - and by being aware that it is never in short supply as a result - we can rebuild from the mess that we are in. We can have the sustainable world we want.
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Nowa rozmowa -
Wydaje się, że ładowanie zajmuje dużo czasu.
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