When banks are allowed to create a nation’s money supply, we all end up paying higher taxes. This is because the proceeds from creating new money go to the banks rather than the taxpayer, and because taxpayers end up paying the cost of financial crises caused by the banks.
Interest on the National Debt
Because the profits from creating money currently go to the banks instead of to the government, the government has to borrow much larger amounts of money to make up for this lost income.
As taxpayers, we have to pay the interest on all this money that the government has borrowed. We currently spend more in interest on the national debt.
Deficit: the Cost of Crises and Recessions
When the financial crisis hit in 2008, hundreds of thousands of people lost their jobs, people stopped spending and businesses’ sales fell. All of this meant that the government collected significantly lower amounts of tax, due to fewer people working, and lower profits by businesses.
At the same time, more people went onto unemployment benefit, which meant that the government’s costs went up significantly. The gap between the money coming in (tax revenue) and the money going out (expenditure) rocketed.
Without a banking system that creates money every time it makes a loan, we wouldn’t have these crises and wouldn’t need to use taxpayers’ money to rescue banks.