What is money, where does it come from, and what are the consequences of how it is created?
In this Cafe on Tuesday 19 November 2013, Justin Lilley (Positive Money/Arian Cymru) and Dr Chris Groves (Social Sciences, Cardiff University) offer some perspectives on these and other questions. Money is a commodity that can be bought and sold on the currency exchanges, but more importantly, it is what Karl Marx called the ‘universal equivalent’, a measure of the value of anything that can be bought and sold. The creation of money, as we have seen in recent years in the UK and elsewhere, is a particularly politically sensitive process.
How is money made? Banks are granted licenses to create money through making loans, and earn interest as a result. This can lead to a ‘leakage’ from the real productive economy to the speculative financial one that has grown up around trading in loans, and thereby in debts. Debt-fuelled speculation led to the financial crisis of 2007-08. The ripples from this crisis continue to spread, with the latest concern being that banks could do as they did in Cyprus and reach into depositors accounts seizing funds to capitalize themselves. These so called ‘bail ins’ could be devastating to stability. Are there now so many holes in the current system of money creation that more ‘bailing’ is not going to keep us afloat? Is it time to abandon ship?
As usual, we start at 8.00 pm in the Cafe Bar at the Gate.