TY  - CHAP
AB  - Abstract This chapter discusses the “seigniorage argument” in favor of public money issuance, according to which public finances could be improved if the state more fully exercised the privilege of money creation, which is, today, largely shared with private banks. This point was made in the 1930s by several proponents of the “100% money” reform scheme, such as Henry Simons of the University of Chicago, Lauchlin Currie of Harvard and Irving Fisher of Yale, who called for a full-reserve requirement in lawful money behind checking deposits. One of their claims was that, by returning all seigniorage profit to the state, such reform would allow a significant reduction of the national debt. In academic debates, however, following a criticism first made by Albert G. Hart of the University of Chicago in 1935, this argument has generally been discarded as wholly illusory. Hart argued that, because the state, under a 100% system, would be likely to pay the banks a subsidy for managing checking accounts, no substantial debt reduction could possibly be expected to follow. The 100% money proponents never answered Hart’s criticism, whose conclusion has often been considered as definitive in the literature. However, a detailed study of the subject reveals that Hart’s analysis itself appears to be questionable on at least two grounds: the first pertains to the sources of the seigniorage benefit, the other to its distribution. This chapter concludes that the “seigniorage argument” of the 100% money authors may not have been entirely unfounded.
VL  - 38A
SN  - 978-1-83867-699-5, 978-1-83867-700-8/0743-4154
DO  - 10.1108/S0743-41542020000038A010
UR  - https://doi.org/10.1108/S0743-41542020000038A010
AU  - Demeulemeester Samuel
ED  - Luca Fiorito
ED  - Scott Scheall
ED  - Carlos Eduardo Suprinyak
PY  - 2020
Y1  - 2020/01/01
TI  - Would a State Monopoly Over Money Creation Allow for a Reduction of National Debt? A Study of the “Seigniorage Argument” in Light of the “100% Money” Debates
T2  - Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought
T3  - Research in the History of Economic Thought and Methodology
PB  - Emerald Publishing Limited
SP  - 123
EP  - 144
Y2  - 2024/04/16
ER  -