Yes, there is a “magic money tree”

There was a big buzz on Twitter this week, when this video of Zoe Williams, a Guardian columnist, claiming that “Obviously there is a money tree – it’s called the Bank of England” was tweeted:

(Right-click to ‘Unmute’ the video.)  

There was a huge amount of critical reactions dismissing Zoe’s point, e.g.:      

Are they right? As our guest author David A. Jones wrote in his blog post Our Magic Money Tree: Fixing The Financial Crisis two years ago,  

“Creating money is as easy as the flick of a pen and the clattering of some computer keys. While the UK’s “magic money tree” is currently controlled by the private banking system, the UK government is quite capable of altering this situation. All it requires is the political will to act. Once the nature of our current monetary system is understood by the public and they are clamouring for action from their elected representatives, it is actually trifleingly easy to get out of this financial crisis and reduce people’s indebtedness. It just takes a little creative accounting.”

Now, even an article in the Telegraph, 30th Sept 2015 claims that there is a ‘magic money tree’. Here’s a short extract: 

Money is the bedrock of the modern economy. But beyond our everyday interactions with it, it can be hard to understand why money matters.

These are the things you absolutely must know about money to understand its role in the UK.

1. Yes, there is a “magic money tree”

The well repeated line that “there is no such thing as a magic money tree” is heard almost everywhere. Even Prime Minister David Cameron has uttered this phrase.

But it’s completely untrue. If the will exists, the central bank can issue unlimited amounts of currency.