A couple of months ago, Positive Money's proposals to reform the creation of money were featured by Martin Wolf (the chief economics commentator at the Financial Times). In an article entitled "Why I disagree with Martin Wolf and Positive Money", veteran campaigner and economist Ann Pettifor responded that the proposal is 'deeply flawed', 'outlandish', and would lead to "a shortage of money, high unemployment and low economic activity".
Every 3 months the Bank of England publishes it's flagship 'Quarterly Bulletin', which explains more about how it works, how it sees its role in the monetary system, and its current thinking on central banking and financial markets.
Lord Turner, former chairman of the Financial Services Authority, is moving ever closer to advocating that the state should issue money and spend it into the economy, in the public interest.
Economics blogger Frances Coppola writes that "Martin Wolf proposes the death of banking", in response to his article last Friday advocating the Positive Money proposals for reform of the banking system.
In any economy there must be someone with the power and authority to create money. This power historically sat with the king and the Royal Mint, until it was transferred to state control under the Bank of England. But now the power to create money sits ultimately with commercial banks, which create new bank deposits as they make loans. These deposits make up 97% of the UK money supply.