14 May 2014

But how will you pay?

This is the question that comes up most often when talking to people about Green policies. “These are lovely ideas,” I hear, repeatedly. “But how on earth will you pay for them?” The answer is as shocking as it is simple.

Banks imagine money into existence. If you’re inclined to wade into that in detail, read more here - http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf (note, this is a document from the Bank of England!) We’d like to nationalise that process.
Quantitative easing is basically imagining money into existence to pay for stuff. Imagining money is what banking means, it is a key part of how the economy works right now. There isn’t a real treasury with real gold coins in it which have to be counted out carefully. There is a pretend treasury with imaginary money in it that is handed out based on politics.

We choose what to imagine money for – or rather – banks and politicians are choosing when to imagine there’s enough money. There is always enough money for war, MP’s soaring expenses, and for sliding into the pockets of the already rich.

There is therefore no reason at all why we couldn’t use that same money differently. It is a choice to buy guns not medicine. It is a choice to chase benefit fraud rather than tax fraud. It is a choice to force austerity on the most vulnerable while lavishing money elsewhere. We can make other choices. The money that can be imagined to prop up banks which has mostly meant adding to the wealth of their shareholders can just as readily be imagined to keep people warm and sheltered and to reduce the shameful need for foodbanks. We Greens are not afraid to imagine a fairer distribution of wealth.

Give a poor person money and they spend it, which benefits the economy. Give a rich person money and it can vanish into the vast stash. There is more benefit for the economy in supporting the poorest than there is in adding to the wealth of those who really do not need anything else.

So yes, we do have lovely policies for the kind of world a lot of people want to live in, and no, the money is not going to be a problem.

Philip adds...... if you want some examples of savings scrapping High Speed Rail would save £42.6 billion, letting privatisation contracts expire allows railsways back in public hands and scrapping Trident nuclear missiles would save £97 billion and free up money to invest in all.


Anonymous said...

Quantitative easing(making up money) is just a form of taxation.
If banks add money to the system, by making it up, this increases inflation. It reduces the value of the money that was already in the system. If it devalues the ten pound in your wallet by a pound, then you have been taxed by ten percent.
It is tax at the same percent for all money in the system.
That tax could be better spent, you're right.....endlessly making money that just gets syphoned off by the rich, is like something from a horror movie.

Nimue Brown said...

It does however make the point that much of the money in existence is imagined - there's no fundamental reality to money. From what I understand of the Bank of England report, most of the money in our economy is imagined into existence by privately owned banks when they create money to loan as mortgages The one thing we most want to do on this issue as Greens is to take control of the money making process, so that we can choose how to deploy it, and so that the ability to make wealth is more democratically owned and distributed. The current approach is not good or anyone, we could re-imagine it to be fairer and more effective.