I’m worried that they appear to have returned from that conference with a rather confused set of views.
They suggest that:
“There is a significant difference between money issued as debt by commercial banks, and money issued by the state like a central bank digital currency (CBDC).”
There is certainly interest bearing money as debt issued by commercial banks, but that doesn’t change the fiver in your pocket. All money is money. Interest free, or interest bearing, it is still money. That fiver could be part of your overdraft or part of your lottery win but it is still a government debt. Or even and, of course, also, a personal credit for the holder (against government taxes).
Any difference is just the source of the money. Once the ‘issue’ is made they are equivalent.They have to be equivalent because having more than one type of the same money becomes chaotic – how would you know if the type you have will be accepted when you need it to be?
PoMo say “publicly created money comes with no obligation for any private actor to repay.” This seems to be the same idea that instead of letting commercial banks create money by lending it into existence, we could have the state create all the money in the economy and then spend it into existence. That is fine but PoMo are completely incorrect when the say “there is no obligation to repay.” Simply creating money for ever is not feasable.PoMo are ignoring tax. Publicly created money always comes with an obligation to pay tax. If it did not then, it would be simply ‘taxed’ by high inflation reducing its value instead.
They seem to justify this thinking with:
“Positive Money’s communication strategy combines an analysis of the problems currently associated with bank lending with the allure of an alternative form of finance provided by the public money circuit.”
Rather than economics this is pretty much marketing speak for a sales pitch. (It cannot be often that analysis and allure appear in the same sentence). Yes, there may be a private money circuit and a public money circuit and, as Charles Adams has pointed out, whilst there is a ‘duopoly of money creation‘ serving individual and common needs, it is all the same money!
If PoMo is to be an effective campaigning organisation it should be offering much better clarity. If it is now to be a think tank it should have a definite and considered policy direction regarding money and its purpose.
By considering that tax is not part of their remit, (with even current ‘austerity’ government spending at around 38% of GDP) unless they take tax into account they are by design, abdicating control of a ‘Positive Money’ monetary system either to everlastingly high inflation or regular stagnation because state income will always be considered as limited.
In the end it’s our money system and, in a democracy, it has to work for the benefit of everyone. PoMo seem to take the piecemeal view often so typical of the ‘practical’ British that they are not going back to first principles but just tweaking the system to try to make it work better.
In those terms, to effect some change, they could be correct, but they are open to the criticism like mine, that they do not properly understand money and indeed any reforming message is made much more comprehensible by going back to first principles and, when these are properly stated their communuication becomes automatically more effective.
Sloppy, imprecise and incomplete thinking only confuses the message and certainly does no good whatsoever for PoMo’s desire to consider themselves a think tank on money.