When do we start to renationalise money creation ?

Question

Back to feudal times, when lending activities where almost forbidden in Catholic europe (all monotheist religions oppose lending activities see for instance http://en.wikipedia.org/wiki/Lord's_Prayer), most exchanges were made through barter, but many were through coins. Governments had the monopoly of coinage.
With capitalism, the banking industry appeared and with it the central bank held by the govt. The central bank had the monopoly of bills emission, but bills became an increasingly small fraction of total money supply.
Right now with electronic money around and all the deregulation that has been allowed, the central banks print very little money, most is created by private banks or other private agents on the financial markets.
THere was a time when money created out of nothing ran directly into the state's coffers, now it runs into private banks coffers. The money creation business has been effectively privatized. This contributes to the deficits and inequality.

When paper money were still the dominant transaction mean, say in the 50s paper money was about 25% of the money supply, now it s way below 1%. Of course banks always created money. Only before they created less money relative to what the government created.

The same holds for the middle ages. Back then, whatever the reason was, the banks lent very little relative to what the government coined.

The problem is not exactly that banks create inequality.
The problem is that banks lend money into existence by lending it. They inevitably tend to overlend in an optimist frenzy, sooner or later there s way more debt around that can be repaid, a credit bust follows.
Excessive reliance on private money creation leads to economic instability for once.
On top of this relying excessively on private money creation deprives the government from a healthy source of income.
Instead of being lent into existence money can also be simply printed, created without any debt related to it by the central bank.
I m asking why no one seems to care about the fact that central bank money has become so little in proportion to the total amount of money in the economy. Printing more money would help reduce the deficit, inequalities and stabilise the economy.

Answer 1

If i understand what you're saying, your argument is that because banks lend money out, they promote inequality in society. And thus banks shouldn't be allowed to lend money in the first place. This clearly is nonsense, with no banks people wouldn't be able to buy houses or start up businesses.
Do you wish to return to feudal times?

Answer 2

Bills have precious little to do with money. Banks create money by lending it out -- this has nothing to do with electronic money. It happened before banks used computers. Consider this: you put $100 in a bank, then the bank lends $80 to someone else who pays it to their workers, who in turn put it in the bank, which in turn lends it to someone else... the total money in the system is perhaps around $500, even though the only cash is the original $100.

Look up information on economics, particularly reserve requirements, velocity, and the like.

Answer 3

You have no idea what you are talking about, do you?

Medieval rulers indeed enforced the church's ban on lending, but only because they wanted no competition for lenders' money from private borrowers.

...At the beginning of what we now know as the Hundred Years' War, Edward III, king of England, borrowed about 1.5 million florins from two Florentine banking houses, Peruzzi and Bardi. In 1345, the English crown defaulted, and both Peruzzi and Bardi went bankrupt...

...In 1519, Jacob Fugger, a merchant from Augsburg, lent 850,000 florins to Charles V, king of Spain (formerly the Duke of Burgundy) to purchase the title of the Emperor of the Holy Roman Empire...

These are just some of the more blatant examples...

Answer 4

Quite right !.