How Could Quebec Create Its Own Debt Free Money?

Executive Summary

• Quebec has analyzed whether it should introduce its own currency.
• This is something private banking interests oppose. Here is the argument in favor.

Introduction

A plan to create debt-free government-issued money has been proposed by Warren Mosler for Quebec. How Quebec can create its own debt-free money is straightforward and is explained as follows.

On Interest Quebec Would Ordinarily Pay

“What about interest rates? With this system, the State doesn’t have to pay interest, even when it spends more than it taxes. Notice that the State does not have to borrow in order to spend more than it taxes, as it simply issues currency, or credits someone’s bank account, when that person wishes to sell something in exchange for Fleurs. The key is that there is price stability as long as the State doesn’t spend so much at market prices that no workers apply for the basic job. In other words, there is price stability as long as the State doesn’t spend more Fleurs than the taxpayers determine they want. And, because the State always requires that at the margin State service is necessary to get needed Fleurs, the value of the Fleur is equal to the value of the labor time of the person who has to work at the basic State job to get the Fleurs.

What Happens When Quebec Spends More Than it Takes in Taxes?

“When the State does spend more than it taxes, the extra Fleurs will likely settle as excess deposits in the banking system. This is an imbalance that any economist will tell you will result in ultra low short term interest rates, perhaps even a bit lower than seen in Japan during recent years. The prime rate, for example, could be expected to be around 3 1/2%. The bank regulators will of course have to continue to maintain their strict capital guidelines and credit requirements to prevent banks from speculating with insured depositors’ money, as they do today. If the State should desire higher interest rates for any reason, it always has the option of offering to pay a desired base rate of interest on excess bank deposits held at the central bank.”

Source: Mosler Economics

http://moslereconomics.com/wp-content/uploads/2018/04/A-Plan-for-Quebec-Monetary-Independence.pdf

Starting up government money is much easier than most people assume. The biggest obstacle is the false information provided by private banking interests. For every country that creates its own debt-free money, this is private bankers that are cut out of the profit loop.