All That Glitters

Last January, Rupert Lowe, Richard Tice, Jim Allister, James McMurdock and Lee Anderson presented a Bill to ban Quantitative Easing while returning to the Gold Standard. Today, although there has been some rallying, the price of gold fell nearly 10 per cent, and the price of silver fell 15 per cent. Cryptocurrencies also dropped markedly.

Well, of course. Far from being somehow opposites, metallists and cryptobros both fail to understand that the issuing of currency is an act of the State, which is literally the creator of all money. It says so on the banknotes. As a sovereign state with its own free-floating, fiat currency, the United Kingdom has as much of that currency as it chooses to issue to itself, with readily available fiscal and monetary means of controlling any inflationary effect, means that therefore need to be under democratic political control, since the responsibility of the Government is to give that currency its value while ensuring the supply of goods and services to be purchased in it. Alongside his adoption of Bernie Sanders’s cap on credit card interest, Donald Trump has begun the end of the anti-democratic era of central bank “independence”.

It is impossible for the currency-issuing State to run out of money. Money “lent” to the Treasury by the Bank of England is money “lent” to the State by the State; such “debt” will never be called in, much less will bailiffs be sent round. Call this “the Magic Money Tree” if you will. There is no comparison between running the economy and managing a household budget, or even a business. There is no “national credit card” to “max out”. “Fiscal headroom” is only the gap between the Government’s tax and spending plans and what would be allowed under the fiscal rules that it sets for itself and changes frequently.

That is what both fiscal policy and monetary policy are for: to give the currency its value by controlling inflation to a politically chosen extent while discouraging certain politically chosen forms of behaviour, and while encouraging others, including economic equality, which is fundamental to social cohesion and thus to patriotism. There is no debt. It is an accounting trick. The Treasury, which is the State, has issued bonds to the Bank of England, which is the State. Even if those bonds were held by anyone else, then the State could simply issue itself with enough of its own free-floating, fiat currency to redeem them. Taxation is not where the State’s money comes from. Nothing is “unaffordable”, every recession is discretionary on the part of the Government, and there is no such thing as “taxpayers’ money”. Say it again that there is no debt. There is no debt. There is no debt.

Yet while the Treasury professes to be “borrowing” far more than had been “expected”, the £100 limit on contactless card payments is to be lifted from next month, by a Government that refuses to protect the right to use cash. Of course I use my card and app all the time. But this is about vulnerable people, local circular economies, and civil liberties. In France, Article 642-3 of the penal code bans traders from refusing cash payment. We need that here. No, the legal tender thing does not cover it. You are not in debt to the vendor until you have the goods.

A suspicious number of those who decry us sceptics of the cashless society also claim that we are under constant threat of cyberattacks, and a surprising number of those who are forthright against the cashless society are enthusiasts for cryptocurrencies, about which the clue is in the name. In the cashless economy, every penny that we spent would be tracked. Cryptocurrencies are beyond democratic political control. And the combination of the two would be, and increasingly is, that level of tracking by those who were thus unaccountable. Resist.