Hier een korte uitleg van het verhaal.
Binnen de eurozone zijn er twee soorten geld: eerstegraads geld en tweedegraads geld. Het eerstegraads geld wordt uitgegeven door de Centrale Bank (CB). Het omvat munten en bankbiljetten en daarnaast de reserves van banken en overheid bij de Centrale Bank (CB). Het tweedegraads geld wordt uitgegeven door de banken. Het wordt gevormd door de tegoeden op de rekeningen courant. Dat zijn claims op echt geld. Met cash betalen is onhandig en onveilig. Voor de meeste en zeker de grote transacties prefereert men gebruik te maken van rekeningen courant bij commerciële banken. Men betaalt liever met tweedegraads geld dus. Omdat er niet veel cash nodig is en er weinig banktegoeden worden geconverteerd naar cash, hebben banken een enorme vrijheid om nieuwe claims, nieuw tweedegraads geld, te creëren.
Die vrijheid wordt niet altijd maatschappelijk verantwoord ingevuld. Daar hebben we de financiële crisis aan te danken. Vandaar dat er discussie ontstaan is over de vraag of deze positie van de banken wel verstandig is. Het is namelijk ook mogelijk om iedereen gebruik te laten maken van eerstegraads geld. Dat wordt o.a. voorgesteld door de Positive Money beweging in de UK en door de Stichting Ons Geld. Ons voorstel sluit daarbij aan, maar gaat op een aantal punten verder: geen cash meer, een publiek nutsbedrijf voor opslag en betalen en een mechanisme waarbij de koopkracht van ieders rekening gekoppeld wordt aan het BBP (Bruto Binnenlands Product). Er is geen enkele reden meer om gebruikers af te schepen met tweedegraads geld.
I’m not sure you can abolish or ban something to make it go away. It has not worked for drugs, alcohol, gambling or any of the other things that society does not think are good for the people. What you need to do is make something that is 10 times better. Then people will switch to it and ignore the old way of doing things. Yes, regulation to reduce harm is essential so that those people who do use something questionable, like drugs, or fiat currency, can use it without permanent damage to their health or welfare. But always have something that is more appealing to use such as good friends, quality entertainment, a healthier more inclusive lifestyle or an alternative monetary system that is more stable and does not reallocate wealth to the banks. What is the motivation for a common person to use this new currency? Is it merely because the former currency is banned? Could you attract someone to use it if the other currency (M2+) was not banned?
It is impossible indeed to force everybody to use only base money. By linking the base money quantities to the GDP the buying power of the accounts is guaranteed. That is attractive. The tax on bae money should not be so high that this advantage vanishes completely. Base money is also the only legal tender. So, payments to the government or to government related organizations have to be in base money. And, at the start of this system all demand deposits are transferred to base money accounts, with an introduction period during which the MS system works parallel with the banks. So, it is very easy to accept the system.
It is still possible of course that people choose to use also different types of near money. That is not a problem for the functioning of the system. It happens also in the present system. It may be expected that most near moneys are linked in some way to base money, claims on base money for instance. The functioning of the system remains OK as long as the total number of payments within the system gives a good estimate of the GDP.
I’m concerned about the buying power aspect and availability of credit. I think the GDP is an incorrect measure on which to base money.
I’ll describe 2 situations in extreme to illustrate the problem.
Maximum storage capacity reached and a catastrophic destruction.
In the situation of maximum storage a civilization fills up all the possible spots to store material. The stores are full and there is no need to increase production. There is plenty to go around and so the next actions would be consumption. The factories stop producing and so the GDP goes down. The buying power of money starts to erode but people do not have work since the factories are closed. People are forced to save and not spend their money because they do not have work. People are also now loosing money in their savings because the GDP is reducing. The GDA “Gross Domestic Assets” are still quite high because production was at maximum for several years. There is plenty of stuff and no need to produce more.
In the situation of a catastrophic disaster that destroys a large amount of production potential. The GDP would be reduced in a huge way. Even the GDA (assets) may be reduced in a large way. Tying the base money to these two values would add a constraint in credit for those who’re seeking credit to rebuild. The base money would be highly reduced in value.
An appropriate measure to tie to base money would should look at a few more things than just GDP. I think that the optimism of a population to rebuild and to expand production should be included. How do you measure this? The increase in money available would be the optimism of the people to rebuild. I think the assets of a population are also a reflection of base money. These are existing assets and not just the assets produced this year. How do you include this?
Dear James,
Is GDP the correct variable to link base money accounts to?
We chose GDP because we looked for a variable that stands for economic activity, a variable whose value is porportional to the general price level and also to proportional to productivity. There are maybe more possibilities, but GDP is an obvious candidate. You sketches two rather extreme cases where economic activity is falling. I can imagine indeed circumstances that lead to a drastic reduction of economic activity. The GDP is falling then. But as long as the buying power of your money remains fixed in terms of the proportion of the GDP, that seems to be OK to me. This “going around” of goods instead of production of goods suggests a more service oriented economy. In such an economy, the economic activity is also represented well by the GDP.
I don’t suggest that the GDP is the only possibility. And using assets as basis is interesting. But then I don’t see how to design the system such that the buying power can be guaranteed.
Jacob