2026-07-24 07:45 UTC
@GeofCox@climatejustice.social
My understanding is that the government doesnt create money through spending. Its spending is funded via collecting taxes or by borrowing (via sale of government bonds which after a fixed term are repaid with interests - also should probably include finance made available via private public partnerships, although they are not very transparent and intentionally designed to keep the financing off government balance sheets).
Banks are where money creation happens, which used to be constrained by fractional reserve requirements, which were effectively scrapped here in the UK and elsewhere.
Replies (2)
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@dazinism@social.coop 2026-07-24 08:12
@GeofCox@climatejustice.social Forgot to mention quantative easing, which is the other way governments create money. https://en.wikipedia.org/wiki/Quantitative_easing
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@GeofCox@climatejustice.social 2026-07-24 07:59
@dazinism@social.coop That's the myth @dazinism - in fact all the money the government collects in tax is simply deleted - and banks only create money to the extent that the government lets them.