117 — Sovereign Money

Boston Basic Income

The cash in your wallet constitutes money that's issued directly by the government. We think of bank deposits as money too, but the deposits in your bank account are merely promises to pay you government-issued money. Some critics of our current financial system argue that our economy would benefit from directly allowing the government to issue more of its own "sovereign money" rather than going through the banks.

Many sovereign money proponents want to establish total public control over money creation and feel that private money should be banned outright. Others simply see an opportunity for the government to take a more active role in managing the economy's monetary system. In his 2020 book, "Basic Income and Sovereign Money: The Alternative to Economic Crisis and Austerity Policy," economist Geoff Crocker makes the case for issuing a basic income in the form of "debt-free" sovereign money. The idea is that the government can pay out a basic income without collecting any taxes or taking on any debt.

To what extent is this possible? How can the concept of "debt-free" or "non-debt" money help us understand the economy? How does a sovereign-money basic income compare to the Consumer Monetary Theory (CMT) perspective that we've previously discussed?

We have two optional readings this week. The first is a 2014 World Economics Association Newsletter article by Mark Joób entitled "The Sovereign Money Initiative in Switzerland."

https://www.worldeconomicsassociation.org/newsletterarticles/momo/

The second is a 2014 article by Geoff Crocker published by the Centre for Welfare Reform, entitled "The Economic Necessity of Basic Income."

https://www.centreforwelfarereform.org/library/the-economic-necessity-of-basic-income.html

Previous related Boston Basic Income topics have included "The Nature of Money", "National Debt", "Consumer Monetary Theory vs Modern Monetary Theory", "Social Credit", "Natural Rate of UBI", and "Quantity Theory of Money"

Photo courtesy of the National Numismatic Collection, National Museum of American History.

(https://en.wikipedia.org/wiki/Sovereign_(British_coin)#/media/File:Australia_1857_Sovereign_(proof).jpg)