Inflation is inevitable if we let profit-seeking bankers print money at a rate of up to $14 billion a year. When we stop the banks creating money and give that power to a dedicated body such as the Monetary Policy Committee, it becomes much easier to keep inflation low.
At the suggestion that any part of the state create and spend new money, many people immediately think of the farcical scenes in Zimbabwe in recent years. Indeed, the most common misguided criticism of the type of reform that we are proposing is that it will cause significant inflation, as an irresponsible government prints as much money as it requires for its own needs.
There is no risk of this happening in the environment created by this modernised system. For one thing, decisions on changes in the money supply will be made not by elected politicians but by an independent body (the Monetary Policy Committee). Politicians will have no influence whatsoever on the amount of money that will be created.
The Monetary Policy Committee ’s mandate will be to consider the needs of the economy as a whole in deciding on the rate at which new money should be injected into the economy. The needs or desires of the elected government do not factor in this decision at all. In fact, the members of the MPC should be expressly forbidden from considering political matters or the intentions of the current government in making the decision
Detail on how it will work is contained in The Solution - Detailed - Guarding against inflation.
Distributing newly created money
Under the current system, new money is created by the main banks and pumped into the housing market and property speculation (with a tiny amount going into productive businesses).
If we stop banks creating money, then any newly-created money can be used to reduce the taxes we have to pay, invest in public services and infrastructure, and reduce the national debt. Newly-created money could even be distributed directly to individuals and families, helping the public reduce our debts and stimulating the economy.
Detail on how it will work is contained The Solution - Detailed - Distributing new money.