MONETARY POLICY SHOULD BE IN FAVOUR OF PUBLIC INTEREST
It seems that our civilization has so far failed to solve the problem of the money supply, although the actual monetary system seems self-evident and undiscutable. Money is a kind of public good, which allows the exchange of goods, thereby enabling the economy to function. The amount of money in circulation determines economic growth, employment rate, prices' level and the amount of taxes collected by the public sector. If the quantity of money in circulation is too small, the GDP decreases, unemployment increases, and tax revenues decline, while public expenditures increase. It is obvious that monetary policy is the most important component of the national economic policy.
But who determines monetary policy? Is that one committed to the public interest? The monetary policy is determined by the autonomous financial system. Formally is the top decision maker of the financial system the central bank, which is completely independent of the governments and of the interests and needs of the people and nations, but unformally financial system is an autonomous lobby, where the maximum power is in the hands of great commercial banks and their owners.
The question is whether the interests of the financial system are in accordance with the interests of public sector, of governements and of nations? The answer is decisevely: no!
This shows the situation in the EU and in the US. Euro-area is already several years mostly in crisis, economic growth is low or negative, unemployment is high and increasing; the public debt is increasing due to increasing of social expenditures, and the debt of the business sector is increasing too. The whole financial and economic situation is designed to meet the interests of the banking lobby. The same is true in the US. Public debt in the US is
17.000 billion dollars, and probably will never be repaid. It is obvious, that something is wrong with the so called monetization through debt, that is creating money only through debt, where financial system and banks create fiat money out of tthe hin air. A very easy way to earn money indeed. But is it justified at all?
The financial system itself generates the financial crisis, economic crisis, high unemployment and high indebtedness of states and public sector. This is not in the interest of the people, states and governments, but it is in the interest of the banking system. Why? Because commercial banks during the crisis acquire inexpensive real estates and equities, and additionally earn money by huge lending to public sector, which is in trouble due to a decrease in inflows into the public treasury. The crisis is a goldmine for banks. The rich bankers are becoming ever more rich and all the others have less and less.
How to change this? The policy making of financial system should be taken out of the hands of the banking lobby and it should be returned to the authorithy of nations and their governments. The benefits from the issuance of fiat money should go at least partly to the public sector, not just to the banking lobby. The states should be allowed to get a certain share of the central bank fiat money annually, which would not be debt toward financial system. Thus it would be possible to eliminate the over-indebtedness of states and the public sector. The original right to create fiat money is the right of the state, not of the completely autonomous financial system, which is becoming a kind of economic parasite, which gets much greater part of GDP than it really creates. It gets also the share of GDP, which belongs to the state and to the people.