Positive money: progressive solution or Trojan Horse?

Abstract Andrew Jackson and Ben Dyson made in 2012 a proposal for banking sector reform, which aimed at eliminating the ability of commercial banks to create money. They claim that their proposal would return the monopoly of money creation to the state, would reduce the debt level in society, and in turn would end the need for expensive bail-outs of too-big-to-fail banks by taxpayers. This paper will discuss the theory-external post-Keynesian criticism of the reform proposal as well as a theory-internal criticism, which focusses on the impact of this proposal for the banks’ customers, the commercial banks and the taxpayers. The analysis will show that Jackson and Dyson’s proposal is not a progressive solution but a Trojan Horse.