Towards a Programme of Monetary Reform

There is a consensus among politically-aware people, that usury is a problem for society and needs to go. It is not sufficient, however, to plan to prohibit usury. At present, money is created by the issuance of interest-bearing loans; and therefore usury cannot be banned until an alternative macroeconomic system is put in place. It behooves any dissident movement with serious aspirations to government, to devise a programme of monetary reform to be implemented upon accession to political power. The present short article is intended to initiate development of such a programme.

Under the prevailing system, money is created by private fiat in the form of interest-bearing loans. Lenders do not possess the money prior to lending it. Interest, and particularly compound interest, on these loans results in a redistribution of wealth from the poor to the rich, and from the public to an alien elite. Society cannot support the burden of these ever-increasing debts.

The replacement of fiat currency with one backed by gold or another commodity is not the answer. The availability of any commodity will not correspond precisely to society’s monetary requirements, and is open to manipulation by foreign and private interests.

Money should be created by government fiat through nationalised banks, backed by the faith and credit of the nation. Fiat money creation is not inflationary as long as it does not outpace the growth of goods and services.

Much of the money should be created in the form of interest-free credit, favouring socially-desirable projects. Government should be funded by this means. The money would be eliminated as it is repaid, thus avoiding inflation.

Since money would be created as required, by government fiat, there would be no need to link it to reserves held by the banks.

Money exists to be circulated. The higher the velocity(1) of money, the more economic activity it enables. This raises the question of whether to employ a system of demurrage(2) to encourage spending.

The currency can be kept stable by adjusting taxes.

Plans will have to be made for the transition from the existing system to its replacement, presumably involving a spell during which public and private banks co-exist.

It is intended that these ideas will be developed in subsequent articles, taking into account any feedback received.

(1) The velocity of money is the rate at which it is passed on in new transactions.

(2) Demurrage is a tax on currency holdings.

Suggested Reading:


Real Currencies

The Web of Debt

The Web of Debt Blog


Ellen Brown ‘The Web of Debt

Ellen Brown ‘The Public Bank Solution’

Michael Rowbotham ‘The Grip of Death’

Kerry Bolton ‘The Banking Swindle’

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3 Responses to Towards a Programme of Monetary Reform

  1. munnyhunny says:

    Proof of concept: Bradbury Pound as implemented 1914, 2008.

    In UK some money (cash/specie) (about 3%) is not usury-based. (one (wo)man band?)

    Non-event of 2014: House of Commons debate in November on Money Creation and Society. Most of the stooges didn’t even show up.

    Arguably not all interest is usury, only if it is charged in respect of loans which contribute to no increase in tangible goods in circulation (see Belloc: Economics for Helen). Yes the point is much argued. Also there may be truth in the idea that Islamic societies tended not to develop materially/industrially at the same rate as “Western” societies because of Islam’s prohibition on riba/interest.

    ‘Much of the money should be created in the form of interest-free credit, favouring socially-desirable projects. ‘

    Money creation should be in the hands of the State, but not necessarily its disposition. Do you want the likes of Camden Council making decisions on projects ‘meritworthy’ for loans?

    Deflation is always much more serious than inflation and the inflation arguments are a knee-jerk by advocates of the status quo.

    Who says there is no retributive justice? It was the burning of the discarded tally sticks that had previously made England ‘Merrie’ for three hundred years which led to the inferno that destroyed the old Houses of Parliament.

    There is much discussion of monetary reform online already, but most(?) is skewed – not surprising given the huge financial interests at stake. Intelligent analysis of existing money vices by e.g. Mike Montagne / Anthony Migchels is not matched by their proposals for reform. What *would* be valuable is an ongoing dispassionate evaluation of the main contenders and their theories, which would help cut down the noise and resultant cognitive dissonance.

    Are you planning on keeping your blog active?

    • Invictus says:

      Thanks, munnyhunny.

      Yes, I do intend to keep the blog active. I just don’t have time just at the moment.

      I hope to give you a fuller answer soon.

  2. Pingback: Government Finance in a Usury-Free Economy - Beyond the Pale

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