In coming to terms with the still smoldering financial crisis little attention has been paid
to the flaws within our monetary system and how these flaws lie at the root of the crisis. This
book provides an introduction and critical assessment of the current monetary system. It begins
with an up to date account of the workings of today's system of state-backed 'bankmoney'
illustrating the various forms and issuers of money and discussing money theory and fallacy
past and present. It also looks at related economic challenges such as inflation and deflation
asset inflation and bubble building that lead to market instability and examines the
ineffectual monetary policies and primary credit markets that are failing to reach some sort of
self-limiting equilibrium. In order to fix our financial system we first need to understand
its limitations and the flaws in current monetary and regulatory policy and then correct them.
The concluding part ofthis book is dedicated to the latter advocating a move towards the
sovereign monetary prerogatives of issuing the entire stock of official money and benefitting
from the gain thereof (seigniorage). The author argues that these functions should be made the
sole responsibility of independent and impartial central banks with full control over the stock
of money (not the uses of money) on the basis of a legal mandate that would be more detailed
than is the case today. This includes a thorough separation of monetary and fiscal powers and
of both from banking and wider financing functions. This book provides a welcome addition to
the banking literature guiding readers through the inner workings of our monetary and
regulatory environments and proposing a new way forward that will better protect our economy
from financial instability and crisis.
