A practical example

[The] system of "debt-free money" can be said to be a far better system because of the accomplishment of higher economic growth without inflation.

Professor Yamaguchi
On the liquidation of government debt under a debt-free money system
Page 28

 

In order to press home the benefits of our Monetary Policy - let's look at price inflation using a real-life situation. Melbourne is to build a new water desalinization plant that will cost about $16 billion over 28 years. It is expected that household water prices will double in Victoria in the near future.

Now look at 2 scenarios:

Our current system

The government has to borrow the $16 billion - and over the course of 28 years, it has to pay back this money with interest. This means that water prices will have to increase (as mentioned above) to allow repayment of the loan with its interest.

ASP Monetary Policy

The government will set aside $16 billion from the money that it is allowed to "create and spend into circulation", and will pay for the whole desalinization plant over the period of construction. Since no money will be borrowed and no interest will be repayable - the price of water to households will be kept constant.


Desal plant