A lesson from history

Alan Peyton posted a comment on this blog yesterday noting a letter that he has sent to HM Treasury, among others, on the subject of government money creation.

In the concluding comment of that letter, to which he provided a Google Docs link, he noted a letter sent which it is claimed was sent to The Times in 1865, referring to the US federal government creating greenbacks to fund its war activity. That letter is reported to have said:

“If that mischievous financial policy which had its origin in the North American Republic should become indurated down to a fixture, then that government will furnish its own money without cost. It will pay off its debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe!”

The author of that missive, now long gone, disclosed his fear, which permeated everything he said. That fear was threefold.

Firstly, it was of representative government itself.

Second, it was of what representative government might do for people.

Thirdly, it was of what representative government free from the control of financial markets might achieve.

Has anything very much changed since 1865? It would still seem that every single commentator on MMT wishes to belittle and undermine the obvious truth that any government possessed of its own central bank and currency that is acceptable for both domestic and international trade and that is backed up by a sound taxation system is capable of funding anything that the people of its jurisdiction are capable of doing.

What the author of this letter makes very clear is that it is the the owners of debt, and those others who would wish to shackle the power of democratic government to deliver well-being for a population, are the greatest constraint on the creation of the public good which government created money represents. Without a doubt they are the greatest challenge that we face if we are to enjoy the future that we both want and need.

This is a lesson from history that we need to remember every day.