Some argue that central banks should not “print” money that is not backed by real assets such as gold, because this “transgresses the proper limits of the state”. Martin Wolf disagrees.
I would argue the reverse: it is the normal monetary system, in which the “printing” of money is delegated to commercial banks, that needs defending. This delegates a core public function – the creation of money – to a private and often irresponsible commercial oligopoly. If you want confirmation of the nature of banking, look at how Barclays abused public trust when providing information used in calculating the London interbank offered rate. Nobody, by now, can be in the least surprised.
Martin Wolf, “The case for truly bold monetary policy“, Financial Times, 29 June 2012.
The late Milton Friedman would agree with Martin. As always, there is much more in the full column, which is essential reading, very didactic and highly recommended.