The Issues


It is widely known that Americans across the political spectrum cherish the idea of democracy, and yet often believe our government does not truly represent them. However, the connection is rarely made between the configuration of our monetary system and the widespread dissatisfaction of the extent to which our government reflects the will of the public. Most importantly, this connection has yet to be established in the mainstream discussion of why our system of government often seems to fail to deliver on the promise of its democratic ideals. By tolerating the current monetary system, we hand over much of our democratic power to financial elites. Our Money reforms would allow us to significantly strengthen our democracy by taking power back from the banks.

The Privilege of Creating Money

The banks’ privilege of creating much of the money supply through lending gives them a huge amount of power in shaping our economy and our government. Money is power. Therefore, the privilege of creating money is one of the most important powers in a society. Under the current system the banks decide when money is created, in what quantity, and where it is first allocated. Importantly, they exercise this privilege for profit. The fact that much of our money is created through bank lending, while we neglect to provide an adequate money supply through public spending, means that the public is effectively made to take on a large private debt burden in order to have a money supply to facilitate economic activity. This delivers a major revenue stream to the banks that would otherwise be unavailable if borrowing wasn’t so artificially necessary. The banks are then able to use the profits from this lending to influence policy through lobbying and campaign contributions. Limiting the banks’ allocation of our money to public interest uses would not only promote the flow of credit to public interest uses, it would also reign in their outsized power which so severely undermines the integrity of our democracy.

The Weakening of Democratic Power

Beyond this, it is important to recognize that the banks’ power due to the design of our monetary system is at the expense of the economic strength of our democratic government. Roughly speaking, there is a limit to how much money can be created before inflation begins to become excessive. The more money the banks create, especially for unproductive uses, the less “space” there is for the government to create money without causing excessive inflation. Without the funding space that would come from restricting the banks’ allocation of our money to public interest uses, our democratic power is significantly weakened. Conversely, restricting the banks’ ability to allocate our money to public interest uses would strengthen our democracy by increasing the space for money creation through public spending. This would make our government much better positioned to fund public priorities (whether tax cuts, public infrastructure, or services).

By allowing the banks to allocate our money for profit, according to their own private interests, we cede to them our own democratic power. In order for the public to exercise a more robust say over our society, it is key for the public to assert control over something that is already ours: the power to create our money.