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Liability could be issued as zero-coupon irredeemable bonds

FT letter Fran

Sir, Simon Ward (Letters, November 13) states that Adair Turner’s proposal to fund government spending with newly created money “would involve the creation of more Bank of England reserves, which represent a liability of the state and bear interest”. But there is no reason that the new liability would have to bear interest, since it could be issued as zero-coupon irredeemable bonds, reads the letter by Fran Boait in Financial Times, 16th Nov 2014.

GuyHarper"With regards to reading the proposal - I may be mistaken, but I think I may be the first person to suggest this parallel system of reserve accounts. I'd be happy to find out someone else has had the idea and fleshed it out in further detail but I haven't seen it anywhere so far :)"I assumed this i...

5 days ago

dannyboyFirstly, I think this proposal (which I was able to outline in a couple of paragraphs) is orders of magnitude less complex than reams of new regulations that are being implemented in an attempt to patch the existing system.If you are worried about banks trying to offload these new reserves back to t...

1 weeks ago

RJIt would create an unnecessary level of complexity. And the banks would likely just use these nil interest reserves to settle with the treasury (for our tax payments) the very same day. A better suggestion would be just to increase the required reserve holdings to back deposits held....

1 weeks ago
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Regulation of banks is not a solution – it ignores the larger issues at play

cherwell

"Greater regulation of banks does not offer any meaningful solution. Regulation ignores the larger issues at play. As we’ve seen in the limited scope of reforms since the crisis, what happens is that you get thousands of pages of complex regulation. But the bank lobby has huge resources, millions of pounds, to spend on lawyers to water down these changes. And there’s nobody fighting that battle on the side of society", argues Fran Boait, Positive Money's Executive Director in the interview in Cherwell, 8th November 2014

ETNIKSI am so glad you in Britain are getting your Parlamentarians to discuss this most important issue and elevate the degree of consciousness they have regarding the importance of Money Creation relative to the Global Debt Crisis we're suffering....

2 weeks ago
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RJIf you own a financial asset. And the company that issued the asset collapsed. Then the asset is worthless unless they have something like insurance in case they collapse. (in this case the liability passes to another company). This applies to bonds and money.Its fairly obvious really but people hav...

1 weeks ago

RJOne / the MMT view is that they can be easily converted to money. So it makes no difference. I don't agree though...

1 weeks ago

GuyHarperT bonds and gilts can't be spent on wages, cars and houses. They can only be saved. They don't permeate the economy like boosting the money supply does....

1 weeks ago
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dannyboyOoops sorry I just re-read your post. I see you are saying that draining reserves prevents rises in house prices etc... and hence is a good thing. That said, I still object to your premise that deficit spending is the way forward. Why can't a *sovereign* government issue its own debt-free money t...

3 weeks ago

dannyboyYou say "this is a good thing as if it stays in the economy it will push up house/ share prices" which I think most people (who aren't share holders or outright property owners... ie the majority of the population) would contest.The point of PM's sovereign money proposal is that there is no need for...

3 weeks ago

RJIt is good to see that some posters are trying to explain what QE is in the comments...

4 weeks ago
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