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What Can We Do About It?: The PMC Transition Plan
1. The political question: decentralized or centralized?
2. Answer: a mix of decentralized distribution, but centralized authority for money creation.
3. The PMC transition proposal: the Bank of Canada expands its balance sheet by funding one particular sector, as a first step -- e.g., medical care, which consumes 22% of federal taxes.
4. You will simultaneously fund the medical sector and increase the money supply (22% tax savings).
5. The significance of starting with one sector is to have an incremental implementation, giving people a chance to observe the results, and make adjustments and corrections.
6. The question of inflation: would it not be inflationary to inject money straight into the economy?
7. Funding the medical sector directly would not be inflationary, but the result of people having more money at their disposal is an open question. The extra 22% of money could be inflationary, but it would depend upon spending habits.
8. How to persuade the players in the system to take on this plan?
9. Education is the first priority, first, to debunk false notions of inflation.
10. Bottom-up political change, activism, is going to be necessary.
11. here is a significant hurdle in conveying the concept to both the public and officials.
12. The PMC transition proposal was sent to the Federal Financing Committee and received first reading.
13. Adoption of the PMC plan is partly hindered by the BoC’s adherence to the global BIS rules.
14. The BoC could proceed without changing existing laws and practices.
15. The BoC acquires securities, i.e., aborbs interest-bearing bonds in return for (newly created) money paid to the Fed Gov. The Fed Gov holds the newly created money in its Consolidated Revenue Fund (actually held within the BoC itself). In the BoC ledger, the bond is listed on the Asset side, while the money created for government is listed on the Liability side of the ledger.
16. On the other hand, the PMC Plan suggests: issue money without a debt instrument being tied to it. The BoC could simply type the numbers on a keyboard and establish the money in the government’s account, without the need for the fed gov to repay either principal or interest. This would replace the conventional practice of funding the budget only through taxes and borrowing.
17. People can’t seem to get outside this box that money creation must be tied to a debt instrument.
18. Primary market: any interest that the BoC makes on the bond goes straight back to the fed gov. It does not hold retained earnings.
19. The PMC proposal is commendable in that it advocates a gradual, incremental transition.
20. Jeff’s suggestions: revise rules for the BoC Board of Directors: Directors should hold office for an extended period; advocate more effectively for their regional constituents, and undergo training to understand monetary creation and the true causes of inflation.
21. What about the approach of setting up alternative community currency systems?
22. Alternative community currency systems can work, but they always seem to suffer problems of scalability and acceptance; also, they would eventually require a central authority to interact efficiently.
23. The existing infrastructure of fiat currency is perfectly adequate; it’s simply a matter of using it properly.
24. Are the institutions reformable? Jeff concedes it will take numbers... but the BoC is already demonstrating the proof of concept. Rather than using exotic financial instruments (derivatives, etc.) let’s experiment with the functionality that the BoC already has at its disposal.
25. Comparison with Ellen Brown’s solution of public banking. The Bank of North Dakota is a great practice -- but it still uses the debt instrument for money creation. A low rate of interest can be construed as a mere service charge, but eventually, the PMC advocates money creation on a debt-free basis altogether. The public financing utility should be removed from the private financial sector.
RESOURCES
Jeff’s suggestion: go to the Progressive Money Canada homepage: 15 minutes to read the material and watch the videos: ‘transitioning to a better money system’ and ‘banking for a better world’.
The other video Jef mentioned: Modern Money, Forget Theory, Part 2
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By Ed Robertson1. The political question: decentralized or centralized?
2. Answer: a mix of decentralized distribution, but centralized authority for money creation.
3. The PMC transition proposal: the Bank of Canada expands its balance sheet by funding one particular sector, as a first step -- e.g., medical care, which consumes 22% of federal taxes.
4. You will simultaneously fund the medical sector and increase the money supply (22% tax savings).
5. The significance of starting with one sector is to have an incremental implementation, giving people a chance to observe the results, and make adjustments and corrections.
6. The question of inflation: would it not be inflationary to inject money straight into the economy?
7. Funding the medical sector directly would not be inflationary, but the result of people having more money at their disposal is an open question. The extra 22% of money could be inflationary, but it would depend upon spending habits.
8. How to persuade the players in the system to take on this plan?
9. Education is the first priority, first, to debunk false notions of inflation.
10. Bottom-up political change, activism, is going to be necessary.
11. here is a significant hurdle in conveying the concept to both the public and officials.
12. The PMC transition proposal was sent to the Federal Financing Committee and received first reading.
13. Adoption of the PMC plan is partly hindered by the BoC’s adherence to the global BIS rules.
14. The BoC could proceed without changing existing laws and practices.
15. The BoC acquires securities, i.e., aborbs interest-bearing bonds in return for (newly created) money paid to the Fed Gov. The Fed Gov holds the newly created money in its Consolidated Revenue Fund (actually held within the BoC itself). In the BoC ledger, the bond is listed on the Asset side, while the money created for government is listed on the Liability side of the ledger.
16. On the other hand, the PMC Plan suggests: issue money without a debt instrument being tied to it. The BoC could simply type the numbers on a keyboard and establish the money in the government’s account, without the need for the fed gov to repay either principal or interest. This would replace the conventional practice of funding the budget only through taxes and borrowing.
17. People can’t seem to get outside this box that money creation must be tied to a debt instrument.
18. Primary market: any interest that the BoC makes on the bond goes straight back to the fed gov. It does not hold retained earnings.
19. The PMC proposal is commendable in that it advocates a gradual, incremental transition.
20. Jeff’s suggestions: revise rules for the BoC Board of Directors: Directors should hold office for an extended period; advocate more effectively for their regional constituents, and undergo training to understand monetary creation and the true causes of inflation.
21. What about the approach of setting up alternative community currency systems?
22. Alternative community currency systems can work, but they always seem to suffer problems of scalability and acceptance; also, they would eventually require a central authority to interact efficiently.
23. The existing infrastructure of fiat currency is perfectly adequate; it’s simply a matter of using it properly.
24. Are the institutions reformable? Jeff concedes it will take numbers... but the BoC is already demonstrating the proof of concept. Rather than using exotic financial instruments (derivatives, etc.) let’s experiment with the functionality that the BoC already has at its disposal.
25. Comparison with Ellen Brown’s solution of public banking. The Bank of North Dakota is a great practice -- but it still uses the debt instrument for money creation. A low rate of interest can be construed as a mere service charge, but eventually, the PMC advocates money creation on a debt-free basis altogether. The public financing utility should be removed from the private financial sector.
RESOURCES
Jeff’s suggestion: go to the Progressive Money Canada homepage: 15 minutes to read the material and watch the videos: ‘transitioning to a better money system’ and ‘banking for a better world’.
The other video Jef mentioned: Modern Money, Forget Theory, Part 2