Sunday, April 17, 2011


Debt has become a scare word meant to paralyze thinking and to create a search for how to reduce it and by how much rather than to examine its assumptions. Here are some facts.
1. All money is debt, there is no other kind.
2. When a bank makes a loan to a business, it creates money.
Policy suggestion:
If a bank can create money for business, why can't the Federal Reserve (the nation's own bank) create money for the Treasury to keep our schools going and the police and fire fighters employed?

1 comment:

The Arthurian said...

Hi Allan.
A few friends keep trying to beat into my head this notion that "All money is debt," but I just can't see it.

To me, if I go to the bank and borrow a dollar, I am putting a dollar of CREDIT to use. This gives me two things. It gives me a dollar of MONEY to spend, and a dollar of DEBT which is my record of credit-in-use.

I have to distinguish the three terms like this. So then, how can money be debt?

Some people say money is equity. I like that better, I think.