Economists are geniuses at avoiding the obvious and saying what various factions among the powerful want to hear. A good example is their discussions of bank-money, which avoid noticing how destructive our modern system is to the human and natural world.
Money-creation has been assigned as a privileged activity to banks for the profit of capitalists and governments. As a result it consists of credit and debt, not as a straightforward commodity.
There are three main differences between bank-created money and money created as a commodity:
1. Newly-created bank-money is allocated to persons (human or corporate) by banks on the speculation that, one way or another, it will turn a profit. It is also allocated to governments on the promise of payment out of future taxes, burdening the citizenry with debt.
Newly-created commodity money, on the other hand, could be allocated in any way subject to democratic approval (e.g. spent by government in lieu of taxation, or distributed equitably, or given entirely to homes for retired cats).
2. Bank-money is created with an inbuilt demand for interest, which takes money out of circulation and into investment. This transfer inflates asset values, making everyone who is rich richer and the rest poorer.
Commodity money on the other hand can be lent, spent and even hoarded: it has no inbuilt widget taking from ‘have-nots’ and giving to the ‘haves’.
3. Once bank-money has done its work, it is destroyed, as loans are repaid. This creates a need for new money, which can only be created by making more loans.
Commodity money, on the other hand, can be managed actively with the objective of maintaining a steady value for money. If there is too much money in circulation, some can be removed via taxation and destroyed; if there is too little, more can be created and allocated as mentioned above.
Because of the above three points, it is foolish to be surprised when money accumulates in vast pools owned by governments and the very rich, leaving savers, independent producers and the poor worse off.