In a forum on Land Value Tax on Facebook one member says “Full LVT and CD of the surplus will fix almost all monetary problems”.
No so. While money continues to be created as interest bearing debt by private banks, there will be more debt in the system than there is money. Banks create the principal but not the interest, so everyone has to compete to earn the interest they must pay. This leads to competitive behaviour, and some will lose out and go further into debt, widening the gap between rich and poor. No, banks can no longer be permitted by society to create our means of exchange as interest bearing debt. Money should be created by the people who use it, by society itself and it should never, never be created as interest bearing debt. Besides if you leave money creation to banks, they will continue to create the bulk of it as mortgages on property. They will continue to have land as their security. Society at large should have this land as security backing their currency.
And just as you can’t just solve the land problem by imposing a full rental on the site value, you can’t solve the money problem without addressing the land problem. Most pressure groups and political parties who advocate monetary reform alone will recommend spending money into existence by government for the building of infrastructure. But when roads and railways are built without a full location fee on land, the price of land will rise. This increased land value is privately captured by the property owner and also by the banks who earn interest on higher and higher mortgage loans.
Land tenure and monetary reform must be implemented together. Tweak one of them only and all you have done is skew the system.
Here is a 42 minute radio interview of Deirdre Kent with Karl Fitzgerald of Earthsharing Australia for the website Renegade Economist. When asked by Karl at one stage of the interview why they should go together, I missed answering one part. http://www.3cr.org.au/economists/podcast/renegade-economists-09102013