James Robertson
We should aim to demolish the distinction which opponents of monetary reform continue to make between Money and Credit of the kind that now is actually bank-created money.
In that respect, for us to use phrases such as "bank-created credit" can be unnecessarily confusing.
We should always replace the word "credit" in passages like this by "bank-created money".
We should remind people that in the 19th century money had to be redefined to include paper banknotes, as well as gold coins and bullion.
Banknotes are now recognised, along with coins, to be "cash". Like coins, they are now issued debt-free by an agency of the state.
It's true that British banknotes still say "I promise to pay...", but that is a meaningless survival from past history.
Everyone knows that banknotes now are not just credit notes.
They are cash, and there is nothing they could be redeemed in except themselves or other banknotes and coins of the same value.
Now similarly we must recognise that the meaning of money has expanded further.
Money now includes, not just banknotes as well as coin, but also the electronic money in our current bank accounts. That clearly has become money, directly and immediately available for spending, even if some people still try to tell us it's something distinct from money, called "credit".
One reason I think it's important to make this clear is because, in correspondence since Creating New Money was published in 2000, people including MPs who should have known better have questioned its arguments in favour of monetary reform, on the ground that the credit-multiplier based on bank creation of credit is different from the creation of money — which it is not, as the official statistics on the money supply recognise.
Lending money which transfers spending power from lender to borrower isn't creating new money. But money created by banks to be lent to their customers is creating new money.
This semantic question is not just nit-picking.
It reflects recognition, or failure to recognise, that the world has changed and with it the meaning of words.
Saying this is not to try to impose an academically correct definition of the word "money" on everyone.
It is to propose that for practical purposes, policy for the management of the official money supply should treat current (ie immediately available for spending) bank-account money and banknotes and coin as constituting it.
Regarding, say, seashells, it is important to make a distinction between, on the one hand, money denominated in official currencies which have the backing of a state (including shared official currencies like the euro) and, on the other hand, unofficial forms of money like LETS, time dollars, seashells, cigarettes, etc, which people and groups of people are prepared to accept as money in particular circumstances and times.
The monetary reform we are interested in is concerned with official currencies - though that is not to say that alternative currencies are necessarily unimportant or illegitimate.
James Robertson
— from Prosperity, November 2003