How Money Is Produced
The general impression that most people have of money is that it exists in paper form together with coins.
The proper term for this is cash. There is about 60 billion pounds sterling in printed and minted cash, issued mainly by the Bank of England.
Adding to this amount, there are hundreds of billions of pounds that have been digitally circulated by the Bank of England under a scheme known as Quantitative Easing, often referred to as QE.
This digital money was issued following the 2009 financial crash.
The amount of digital money issued is somewhere around 375 billion pounds.
The pound sterling, like many other currencies, is not based on assets that guarantee its value, and as such it is a thin-air currency. Currencies printed out of nothing can have an effect on share markets and even on trade, especially if the confidence in this kind of money starts to fall away.
In the event that something should go wrong in the financial set-up of Western economies, including the British economy, the State needs to have a backup plan.
Pensions and benefits and salaries would need to be paid out in part in food parcels and in part in ration cards, with only a limited amount of cash in the hand.
This will be essential in order to prevent hunger breaking out, as many people could find themselves without cash.
A crash in the share markets and a default on the repayment of the public debt would wipe out payments from private pension funds, and it would also affect financial institutions in general.
The State has the duty to ensure that rations are handed out equally in time of a financial or economic catastrophe.
It is unlikely that any such contingency plans exist in Britain.
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