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Graham Hodgson (Guest Author)

Graham was involved in the civil service until retiring and spending the last 15 years independently researching the monetary system and potential reforms. He is undertaking further research for Positive Money and developing models of the current monetary system and investigating the impact of any potential reforms.

Helicopter money: setting the tale straight (A response to the Bank of England’s Underground blog)


In his August 5th post at Bank Underground ("a blog for the Bank of England's staff to share views that challenge - or support - prevailing policy orthodoxies") Fergus Cumming, a member of the Bank's Monetary Assessment and Strategy Division, discusses helicopter money proposals. He explains "why such a policy is different to quantitative easing, why it is unlikely to have much impact relative to conventional fiscal measures and the pitfalls associated with pursuing it".

Rory ShortWith a fiat currency there are only two kinds of economic debt. One is when the user of newly issued currency has not yet sold something of equal value in order to settle the debt and the other is when somebody borrows money from someone else for whatever purpose. The first recipient of newly issued...

August 2015

RJIf notes and coins could not be used to pay tax. Or buy Govt bonds. Or exchanged for bank credit. Then they would have no value. So notes and coins are supported by a Govt Liability = debt (ie the Govt will write of an asset - tax owing - for an other worthless piece of paper). This is basic stage o...

August 2015

Rory ShortEconomic activity is something done by people when they make exchanges Money is just a facilitative add on which boosts economic activity and thus benefits the whole community. Newly issued fiat currency has nothing but its face value so it cannot create an interest earning debt. The debt that it d...

August 2015
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State issued digital currency in Ecuador?


The BBC published an article on Saturday "Ecuador gives details of new digital currency" reporting that the Central Bank of Ecuador was to issue a digital currency. The story apparently originated with the New Delhi Television (NDTV) technology team, to which the BBC provides a link. The BBC report is largely a rewrite of the NDTV article but claims that the money is to be used to pay civil servants, which is flatly contradicted by the NDTV article, and which apparently comes from an August 24th piece in the Wall Street Journal attacking the plan. The official currency of Ecuador is the US dollar with coins denominated in fractions of a dollar issued by the Central Bank and The WSJ article labelled the proposals "an escape hatch to get out of dollarization."

Bob WelhamAn excellent essay, Graham. I like particularly the term ‘medium of payment’ for commercialbank credit-money. It is indeed more accurate and insightful than ‘medium ofexchange’. I wish that I had used it when describing the UK two-tier moneysystem.http://www.positivemoney.or...You expose cle...

April 2014
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It’s official! Economics students are being misinformed, says Bank of England

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Since at least the 1960s, central bankers have, in their ones and twos, been quietly airing the message through ill-reported speeches and evidence to official committees that money is created by private banks when they make loans. But in their pronouncements targeted at the general public they have persisted in reiterating the fictions promoted by economics textbooks about relending deposits and reserve requirements and the money multiplier.

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