Author: Andrew Jackson Editor: Ben Dyson Design: Henry Edmonds Positive Money 205 Davina House 137-149 Goswell Road London EC1V 7ET SOVEREIGN MONEY Tel: 0207 253 3235 PAVING THE WAY FOR A SUSTAINABLE RECOVERY Email:
[email protected] Website: www.positivemoney.org ISBN 978-0-9574448-2-9 © November 2013, Positive Money PositiveMoney Acknowledgements We would like to thank Vicky Chick, Nick Edmonds, Dominic Haldane, Graham Hodgson, Michael Reiss, Stephen Stretton and the whole Money and Credit group at UCL for their useful comments and sugges- tions. We would also like to thank Joseph Huber and James Robertson, whose work in Creating New Money partly inspired this paper. Finally, we would like to express our gratitude to the supporters of Positive Money, without whom this paper would not have been possible. Of course the contents of this paper and any mistakes, errors or omissions remain the author’s own. Contents Executive Summary 4 Part 1: An introduction to Sovereign Money Creation 7 Introduction 7 The financial crisis 7 The post-crisis recession and recovery 9 Policy responses to the recession 10 Conventional monetary policy: interest rates 11 Unconventional monetary policy 11 Why monetary policy was ineffective in boosting the economy 13 Fiscal policy 14 Summary: The policy dilemma 14 Prospects for a sustainable recovery 15 An alternative policy: Sovereign Money Creation 16 A step-by-step procedure for Sovereign Money Creation 18 Using Sovereign Money Creation during downturns 19 Using Sovereign Money Creation as a conventional