George Osborne injects further silliness into the independence debate

I’ve commented before about the silliness of some of the arguments that have been made in the independence debate.  For the ‘yes’ campaign, we’ve been told that everyone beyond Scotland is only waiting for the opportunity and they will roll over and invite the Scottish Government to tickle their tummies.  For ‘no’,  we’ve been told that there will be border guards patrolling with dogs, that Scotland will offer open season to terrorists and that Scottish televisions won’t be able to view Doctor Who.  George Osborne, reported in the Scotsman,  has just come out with a staggeringly silly idea of his own: that if Scotland tries to use sterling it will run out of ready cash. Scottish pound notes “wouldn’t exist any more”.

… for every pound the Royal Bank of Scotland issues as a banknote, it would be like a kind of IOU against the pound they have kept in their bank vault.  … it would be a situation where you would wait for coins and notes to come across the Border, either people bringing them or through transfers of money electronically because of a business deal or something like that, and then you want to try to hold that money in the country or at least make sure you haven’t run out of it.

Money is a means of exchange, and Scottish money is no different. Most of these exchanges are based on trust; Scottish pound notes no more have to be backed up by a stock of English pounds than English pounds have to be backed up by the memory of gold held in the vaults; and  banks have a wide-ranging capacity to issue money as they think fit.  It seems, then, that the current Chancellor of the Exchequer doesn’t understand what money is or how banking works.  Come to think of it, that may not be so much of a surprise.

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