Monetary reform

Monetary reform is accounting reform that reaches more deeply into banking central bank, money supply and monetary policy. It affects how money is created and destroyed, and what constitutes a reliable measure of economic growth and measures of national income.

In the United States, the Federal Reserve and Department of the Treasury are responsible for these functions. Thus the term Treasury reform, which is a synonym but one that applies only to such reform of the US dollar.

In recent years debates have focused on improving the use of currency. These debates have been linked to some extent with the valuation of non-traded goods and social outcomes.

While ensuring the independence from government of the central bank or the creation of a currency board are practical monetary reforms that many countries have implemented (e.g. Bank of England) to combat inflation or currency speculation, many suggest that more radical monetary reform can assist in sweeping economic or social changes.

Many prominent economists have criticised the existing global financial institutions like the World Bank and International Monetary Fund and their policies regarding money supply, banks and debt in developing nations.

There is also widespread criticism of the role of money GDP as a method of measuring well-being rather than methods based on human development theory. See measures of national income.

Some go further and suggest that wholesale reform of money and currency, based on ideas from green economics or Natural Capitalism would be beneficial. These include the ideas of soft currency, barter and the local service economy.

Many theorists (e.g. Robert Mundell) see a role for global monetary reform as part of a system of global institutions alongside the United Nations to provide global ecological management and move towards world peace.

Some (e.g. Henry Liu) argue that monetary reform is an important part of a move towards post-autistic economics.

While most mainstream economists favour monetary reforms to reduce inflation and currency risk and to increase efficiency in the allocation of financial capital, the idea of all-encompassing reform for green or peace objectives is typically espoused by those on the left-wing of the subject and those associated with the anti-globalization movement.

Apart from what is briefly discussed above there are more important, and radical kinds of monetary reform that deserve our full attention. One of these not found in this website is concerned with the idea of non-taxation monetary reform. This system of economics, and fiscal philosophy is still in the process of research, and development by Robert Searle.He is virtually the only known authority on this subject in the world. Essentially, it believes that governments do not need to raise direct, and indirect taxes but instead have new "debt-free" created money to properly fund as never before its various social, economic, and political projects. This is undertaken by so-called Treasury Banks. Charities, and other NGOs, or non-governmental organisations could largely be financed by special Grant Generating Banks which would be independent of governments, and multi-national corporations. All this would have revolutionary implications for democracy, and indeed, the world at large.Inflation itself would be controlled by super-computers which would allow for stunning price flexibility within a high growth economy.

Though there is more than enough money to change the world many times over it is LEGAL ACCESS to it which is the problem. This is solved by the responsible creation of new money where there is a genuine need. This is a far better approach than attaining earned money by re-distribution through taxes, or charitable donations as various projects would be fully funded as never before. The only limitations of course would be effective planning, and relevant resources.

Non-taxation monetary reform is much more important, and advanced than interest free monetary reform. Briefly, the latter realizes the power of the banks, and the fact that now they create virtually all of the worlds money supply "out of thin air" as loans, or credit to industry, government, and society. They of course make huge super-normal profits out of this service by charging interest which radical monetary reformers believe could be abolished by political means. This would make life easier financially for the economy, and society. Non-taxation monetary reform includes this but goes beyond it into a system which would have far greater social, economic, and political benefits. By itself, interest free monetary reform will probably go nowhere unless it united with non-taxation as being the primary source of concern.

What has been described in the above has been termed Transfinancial Economics. It is not a totally new idea. There have been societies past, and present which had, or have had no tax systems. In times of extreme emergency, governments have been forced to print money with little, or no taxation to fund their countries plight. Usually, as in the case of the French Revolution this lead ultimately to hyper-inflation, and de-valuation of the currency. With modern day super-computers this would be impossible.

Yet, there is evidence to suggest that new money can be created in sufficient quantities without inflation occurring. This it has been claimed happened in America during World War II when other financial measures admittedly existed. The Social Credit movement founded by the engineer Clifford Douglas suggested that this could always happen even during peacetime, and thus reduce the tax burden. Yet, non-taxation monetary reform of course goes beyond this because there is simply no taxation at all.

Critics have wondered what would happen if there was an excess money supply that would outstrip the production of goods, and services. The answer is simple. Such "wealth" would easily be put away for the time being in deposit accounts indexed-linked to inflation. With new rapid economic growth more and more products, and services become available, and the "dormant" funds due to excess money supply would now be able to buy them. In effect, they would become part of the productive capacity of the country.

LETS, or Local Exchange Trading Systems involve the use of made up money whose value as a medium of exchange is agreed upon by small, and large groups of willing people. It is essentially tax, and indeed, interest free when borrowed.Such methods are best suited to a stationary, or low growth economy. At a national level it was claimed notably by Benjamin Franklin that the Colonial Scrip was introduced to bring rapid prosperity to the American Colonies. Significantly, if we are to believe him this was a tax, and interest free currency which proved to be extremely successful.

Abba Lerner, who founded Functional Finance believed it could be possible to create a world with little, or no taxation somehow through the use of savings. John De Santiss in Baltimore, USA, claimed he had an economic "vision" of a world without taxes, and has set up his own website to promote interest, and new research into it so that his original ideas can be radically improved upon.

With more, and more growth in the economy, more, and more resources of the planet would be used. However, simple, and advanced forms of sustainable technologies such as nanotechnology would be funded as never before by special grants, and interest free loans. As a result, profit, and non-profit organisations would be able to ensure the existence of new resources for future generations to come.

As one can well imagine the implications of Transfinancial Economics would be immense. Here, are some key examples.Public services could be drastically improved, and financed properly without taxation. Pensions would be funded as never before. Projects which could be vital for the very survival of the human race in the long run could be financed initially with massive business grants (non-repayable). All sorts of things become possible with non-taxation reform. It is at the very roots of global justice, and the progress of humanity.

Monetary reform

See also