The configuration of central banks as organizations totally separated from politics, governed by professionals and technocrats who base their decisions on scientific criteria, is one of the most deeply rooted myths in public debate, but it is only a neoliberal dogma.
This is how monetary policy economist Susana Martín Belmonte explains it, with a didactic style and multiple examples, in a new installment of the series The economy is derailed, which aims to make known solvent economic traditions, far from the approaches of orthodox economics. The series is a co-production of the magazine Economic alternatives and elDiario.es and is supported by the Unique Projects Program for the Social Economy of the Generalitat of Catalonia.
Martín Belmonte, trained at the Autonomous University of Madrid (UAM) but based in Barcelona, is a researcher at Revo-Sustainable Prosperity and one of the greatest experts in social and complementary currencies, although in recent years she has focused on the reform of conventional monetary circuits and, above all, at the European Central Bank (ECB).
This is where the “mother of the lamb” is to be able to concretely address any subsequent political debate: thanks to monetary policy, the playing field is created on which the measures that governments and parliaments wish to implement can later take place (or not). And despite their enormous importance, the decisions are taken by experts who do not have to respond to any democratic control or mandate, but only to the rules of the institution, whose great priority is to contain inflation without dwelling on the consequences they have for the populations. flesh and blood.
Thus, for Martín Belmonte, it is urgent to “democratize central banks and the monetary and financial system”, aligning its objectives with the major challenges posed by governments and European institutions. Very specifically, the energy transition to mitigate climate change, but also housing or employment policies, among others.
The creation of money
In this hour-long interview, the economist analyzes the process of money creation in an attempt to refute some of the most deeply rooted dogmas of neoliberal doctrine, which generally present themselves as simple technical options that “really reflect positions of power.”
According to him, the current monetary system is designed to protect the interests of banks, which, according to him, have effectively supplanted governments as the true creators of money. In doing so, banks have reoriented this key circuit towards their own interests and not towards those of citizens, as demonstrated by the extraordinary measures promoted by monetary authorities to finance financial restructuring in the face of the phenomenal global crisis of the late 1990s-2000s, which contrasts with the constant calls for fiscal discipline despite the existence of very pressing challenges for citizens and the planet.
However, Martín Belmonte believes that there are enough gaps in the legal architecture of the ECB to be able to promote other types of monetary policies, which prioritize the financing of the energy transition, which requires huge sums of money.
The economist largely agrees with the postulates of modern monetary theory, promoted in particular by progressive academics in the United States. He relativizes the importance of reducing the public deficit and public debt at all costs as required by neoliberal doctrine. And he particularly criticizes the vision that equates the budgetary limits of a State with those of a family, one of the metaphors most used by those who prioritize austerity policies.
