Hello all,I have posted here an introduction on the theory of natural money (hoarding fee, no interest, no credit). I am sure this will be the monetary system for the future because it creates the most efficient economy and the highest level of economic freedom and wealth for everyone.Bart
Natural Money: The most efficient monetary system
IntroductionNatural money was the result of the discovery of the most efficient monetary system. The natural money monetary system will create an economy with constant economic growth at maximum potential that will destroy all other monetary systems in competition. Therefore the natural money monetary system will become the dominant monetary system in the world at some point in the future. Natural money has the following features:- a hoarding tax, which amounts to 0.5% to 1.0% a month;- a complete ban on usury, which is charging interest on money;- a money supply that is constant which only can be changed by a democratic vote;- a complete ban on credit, which is creating money out of nothing.HistoryJoseph in EgyptMoney with a hoarding tax was already introduced by Joseph when he was viceroy of Egypt. When the pharaoh had dreams about seven fat cows being eaten by seven lean cows and seven full ears of corn being devoured by seven thin and blasted ears of corn, Joseph explained the dreams to the pharaoh. He told the pharao that seven good years would come and after that seven bad years would follow. Joseph advised the Egyptians to store food on a large scale. They followed his advise and built storehouses for food. In this way Egypt survived the seven years of scarcity.What is less known, because it is not recorded in The Bible, is that the storing of food resulted in a financial system. The historian Friedrich Preisigke discovered that the Egyptians used corn receipts for money. Farmers bringing in the food, got receipts for corn. Bakers who wanted to make bread, brought in the receipts, which could be exchanged for corn. It did not take long before the receipts where generally accepted as money. Because of the degradation of the corn and mice eating it, the value of the receipts was steadily decreasing. This enticed people to spend the money fast.The corn receipt system lasted for many centuries. It made sense to store food to provide for hard times. This currency remained in function in Egypt until it was replaced by the Roman currency during the late Ptolemaic period. The introduction of natural money may have enabled Egypt to remain a stable civilisation for another 1,500 years. The Egyptian civilisation lasted for more than 2,000 years, far longer than any civilisation ever.The miracle of WörglThere are a number of successful examples of the introduction of money with a hoarding tax. Wörgl is the best known example. During the Great Depression, the Austrian town of Wörgl made economic history by introducing a complimentary currency. The mayor Michael Unterguggenberger had a long list of projects he wanted to accomplish, but there was hardly any money with which to carry them out. Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as 'stamp scrip'. The Wörgl currency required a monthly stamp to be stuck on all the circulating notes for them to remain valid, amounting 1% of the each note’s value.Because nobody wanted to pay what was effectively a hoarding fee, everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. This offer was rarely taken up though. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge.The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the Schilling. This in turn increased trade, creating extra employment. At the time of the project, Wörgl was the only Austrian town to achieve full employment. Six neighbouring villages copied the system successfully. In January 1933, the project was replicated in the neighbouring city of Kirchbuhl, and in June 1933, two hundred Austrian townships were interested in adopting the idea. At this point the central bank panicked and decided to assert its monopoly rights by banning complimentary currencies. The people unsuccessfully sued the bank and later lost in the Austrian Supreme Court. It then became a criminal offence to issue 'emergency currency'.12 steps to freedom and wealthThe natural money system brings freedom and wealth in 12 steps:1. Interest on money should be banned. Return on capital is a good thing, and should not be abolished.2. Raise a tax on money. This is not a tax on wealth, so shares, real estate and money lent, are not taxed.3. Do not create more money, so there will be no monetary inflation.4. Because there is a tax on money, people will soon use the money to invest, to consume or to lend without interest.5. Because on money lent, no interest may be charged:- money will only be lent to reliable people and companies.- less money will lent and more money will be directly invested in equities and real estate.6. Therefore there will never be an economic crisis, because money is spent directly and there are no bad loans.7. Because all money is directly used for investment or consumption, the economy grows steadily at maximum potential and there is full employment.8. The financial sector is largely superfluous. That is a good thing, because this sector produces nothing and destabilises the economy.9. Governments also need much less to interfere with the economy.10. As the economy grows constantly at maximum speed, and because no more money is created, prices will fall. Therefore loans with zero percent interest will have a return that is probably higher than the interest rate you will get at the bank now. The money lent will be worth more when the loan matures.11. If one country chooses to apply this system, it will attract capital from other countries since the return of loans with zero percent interest rate is higher than the yield on interest in other countries. Therefore, all other countries will need to do this, if one country has changed its money system in this way.12. Now everyone is free. There is no fear in the economy. There will always be work for employees and there will always be customers for viable businesses. Nobody is deeply in debt.EffectsUsing natural money all kinds of problems we face now can be solved easily. Natural money will have the following effects:- Natural money will save the earth and nature by promoting sustainable investment and recycling;- Natural money will free people and countries from debt slavery;- Natural money will end unemployment without government intervention;- Natural money will create a stable economy without crisis which does not need government or central bank intervention;- Natural money will end senseless economic activities in the money system which destroy the economy;- Natural money will result in a dramatic rise in government income which makes it easy to lower taxes and address all social problems in society;- Natural money economies will perform better than all other kinds of economies. This will attract investment capital, which forces all other economies to adapt the natural money system.QuotesNatural money is the most efficient type of free money. Silvio Gesell outlined the theory of free money in the Natural Economic Order. Many famous economists and scientists saw the enormous potential of free money:- "I thoroughly enjoyed Silvio Gesell's brilliant style. The creation of money that cannot be hoarded will lead to a different and more real kind of property."Professor Albert Einstein, Nobel Prize Winner- "Gesell's name will be a leading name in history once it has been disentangled."H.G. Wells- "The application of Gesell's principle of circulation of money will lead the nation out of the depression within two to three weeks. I am a humble student of this German-Argentine businessman."Professor Irving Fisher, Yale University, America's greatest economist- "I believe that the future will learn more from the spirit of Gesell than from that of Marx."John Maynard Keynes- "Gesell's work will initiate a new epoch in the history of mankind."Prof. Dr. B. Uhlemayr- "Gesell's discoveries and proposals are of the greatest importance for centuries to come."Dr. Theophil Christen, eminent mathematician and physicist, BerneMore informationThe following information can be found on the Naturalmoney.org website:- More information about the current state of the economy can be found here: http://www.naturalmoney.org/howbad.html.- The natural money theory in detail can be found here: http://www.naturalmoney.org/full-theory.html.- A realistic conversion plan to the natural money economy can be found here: http://www.naturalmoney.org/conversionplan.html.- A plan for the future with natural money can be found here: http://www.naturalmoney.org/buildfuture.html.
question, do you call it 'natural money' because its completely artificial?
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
nirgrahamUK:question, do you call it 'natural money' because its completely artificial?
It is natural in the sense that it is derived from corn receipt money that Joseph introduced to the Egyptians and the Natural Economic Order of Silvio Gesell.
haha, well then,
your project is 'enlightened', in the sense that you must have been light-headed when you thought it up and could do with a little sit down
democratic voting and taxes huh? sounds like a winner.
Interest is usury?
Voted money supply?
Credit = money creation?
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community.
nazgulnarsil:democratic voting and taxes huh? sounds like a winner.
It is quite cumbersome to organise a referendum on a money supply change. However, it does not matter much:
The fundamental soundness of natural moneyA government issuing natural money might be tempted to issue additional currency. But this is not a rational thing to do. First of all, tax income should increase because there is no inflation and money is circulating faster. So there is no rational reason to destroy the system that is bringing wealth. It simply does not make sense. Should the economy slow, and tax income diminish, which probably will not happen, the economy can be revitalised by raising the money tax. This has the same effect as issuing additional currency. Furthermore, if loans are guaranteed as a percentage of money supply, nobody can be harmed. Therefore, from a logical point of view, natural money is the most fundamentally sound money that can exist in the real world.Money supply is inflexible (fixed) so banks always have to pick the best borrowers. This will prevent the economy from overheating when there is a sudden burst in demand for capital. This will also eliminate the bust that will eventually follow.If the money supply does not increase or provisions are made to guarantee the value of the loan, the growing wealth will lower the prices of goods and services and therefore the value of the loan will increase in real terms. This is an interest on capital, based on the growth of wealth of the society as a whole. It is therefore highly probable that you get a positive return out of lending money without interest. Because the natural economy will be stronger than a traditional economy with interest on money, the return on money lent will probably be higher in a natural economy without interest than in a traditional economy using interest on money. If traditional economies must compete with natural money economies for capital, they do not stand a chance as soon as the positive return on zero interest is discovered.Because of the price deflation in the natural money economy, the price of productive assets such as property and land will fall over time. This forces the owners of those assets to use those assets in a productive way. Letting those assets stay idle will lead to loss of money. This will bring all productive assets to maximum use. It will destroy opportunities to speculate, which is the keeping of assets to make money on price inflation.
You've posted about this before...
Freedom of markets is positively correlated with the degree of evolution in any society...
niphtrique:12. Now everyone is free. There is no fear in the economy. There will always be work for employees and there will always be customers for viable businesses. Nobody is deeply in debt.
I had my doubts, but then I read this. Now, I'm convinced.
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
Epic fail.
If I handed you 1 oz. of gold and you promised to pay me back in 20 minutes, that is credit. When exactly did I create money out of nothing?
If I wrote it more than a few weeks ago, I probably hate it by now.
Someone set us up the bomb.
"The men the American public admire most extravagantly are the most daring liars; the men they detest most violently are those who try to tell them the truth." -H.L. Mencken
niphtrique:I am sure this will be the monetary system for the future
I hope not.
The first two steps are already wrong in my book....
1. Interest on money should be banned. - Why? When you buy a car you pay for it, why shouldn't you pay when you "buy" money?
2. Raise a tax on money. - I do not agree with any tax.
I. Ryan: If I handed you 1 oz. of gold and you promised to pay me back in 20 minutes, that is credit. When exactly did I create money out of nothing?
Only if you trade the promise on the market.
Anything that starts with a hoarding tax right away is not going to be natural.
The fallacies of intellectual communism, a compilation - On the nature of power
Exactly. Here's a situation though, that I think would break his system altogether. In such a situation in which the money supply is taxed on hoarding, then what would happen as a possible alternative is that people would stop using the recognized money/currency completely in replacement with gold/silver/script or some kind. Thus, bypassing all laws regarding the money system, producing a parallel 'money' that's unrecognized and unregulated. Allowing for interest payments and hoarding to be both in existence; lawful and untaxed.
The problem with the natural money system is that it attacks debt, when it is not the real culprit of the monetary crisises that have occurred or are occuring. Debt is simply the acknowledgment that there's not an infinite amount or quantity. Equally credit is a similar acknowledgment that even though things are finite, wealth itself can still grow (still finite, but never explicitly excluded from persistent or sustained expansion). Thus, debt and credit act more as natural complements in the economy. Debt limits unnecessary consumption of wealth, credit ensures viable ventures are explored for further wealth generation. Each are necessary for an economy, and each cannot be 'regulated' outside of market forces which signal which consumptions should cease and which ventures should begin. The attempt to model the economy to some other 'desirable' behaviors will always lead to distortions, simply put, and these distortions may be worse than the accepted fact that some people will default on their debts, and that some people will never loan out wealth as credit.
"The power of liberty going forward is in decentralization. Not in leaders, but in decentralized activism. In a market process." -- liberty student
Your God is money and Ludwig von Mises is his prophet
I can imagine why you are ignoring the greatest minds of mankind like Irving Fisher, John Maynard Keynes and Albert Einstein because you have a specific political agenda. I can imagine you are ignoring the example of Wörgl where the economy improved beyond imagination and people preferred stamp scrip money because it does not confirm your views. Your must be blind for the evidence. Many of you seem to quote the works of Von Mises and Rothbard as if those works are holy books (see also: http://mises.org/story/797). Money seems to be your god.
However, some of you may still believe there is another God. Recently I found out that a monetary system introduced in The Bible combined with a ban on interest, like God demanded, creates a superior financial system. If God exists, God must know better than we. I think I know what the reason: usury (which is interest on money) destroys our living conditions and our society. I hope you can imagine that despite al the negative comments I get from you, I am still convinced that you are astray. If I should choose a god, it most certainly will not be money.
You may read this:
How about, I am ignoring them because they're either a) not great minds or b) full of shit or perhaps both? How about I am not wont to give in to stupid, anachronistic, superstitious authoritarianism banning the practice of charging interest? Look, I do not want to live in an economy without interest. Find someone who does and cares and stop wasting our time with stuff you've posted over and over. Interest exists without money, so what you say about money being our "god" just evidences how clueless you are. If people want to engage in interest-free, "scrip-based" economices I do not care. Let them. Just leave me out of it.
Niphtrique,
A point on usury in the Bible- it is highly debated what it actually means and I wouldn't side with the simple interest definition; it is more likely to be punitive interest rates. If you look at the the context where it is described pejoratively it is the context of exploiting the poor. ie you shouldn't do it. Also other usages are in regards family of tribes of the nation of Israel and as such you cannot seperate usury from the purpose of the Mosaic law- to point to Christ as the one who would crush the serpents head prophesised in Genesis 3 and an attempt to bring the kingdom of God on earth through Israel. the latter point explains aspects of the Mosiac law which may not seem Rothbardian since the aim was keeping the land in israel's and the specific tribes hands. Your quote from the parable of the talents actually justifies morality of interest anyway.
I suggest you read Hulsmann on the Origin of Interest
The atoms tell the atoms so, for I never was or will but atoms forevermore be.
Yours sincerely,
Physiocrat
Interest is of course highly debated because people do not like the idea of God wanting something they do not want. So they try to change definitions. Usury definitely was defined as the charging of interest (and not excessive interest). However people do not like that idea because they think they have the right to something (be it interest, gay marriage or social benefits). Interest is connected to gold being money:
Because gold can be stored without losing value, it does not make sense to lend gold without charging interest. Hoarding money is sometimes be safer than bringing it to the bank, because banks may go bankrupt. Therefore people may be hoarding money for a rainy day. When more people do this simultaneously, money is removed from circulation, weakening the economy and the banks. When this happens, even more people will start hoarding money, because they expect times getting worse. This is the beginning of an economic crisis. Many people will lose their income, and if they do not have money, they must borrow money against interest for unavoidable expenses such as food. As a result, the situation becomes even worse.Hoarding money is not the same as saving money. Saving money and bringing money to the bank is good for the economy because the bank can lend out the money for productive investments. Gold and silver were chosen as money because they were an excellent store of wealth. A simple solution is therefore: gold and silver should be a store of wealth and money should only be a medium of exchange. Therefore gold and silver should not be money. However people must have the option to buy gold and silver if they think that the financial system is unsound.
Jon Irenicus:How about, I am ignoring them because they're either a) not great minds or b) full of shit or perhaps both? How about I am not wont to give in to stupid, anachronistic, superstitious authoritarianism banning the practice of charging interest? Look, I do not want to live in an economy without interest. Find someone who does and cares and stop wasting our time with stuff you've posted over and over. Interest exists without money, so what you say about money being our "god" just evidences how clueless you are. If people want to engage in interest-free, "scrip-based" economices I do not care. Let them. Just leave me out of it.
I assume you think you are a great mind because otherwise you think you can make a sophisticated guess about who are and who are not. If you do not believe in God that is fine with me, and all the other things you think I do not care. Interest definitely exists without money, because of the existence of productive capital. Money is not productive and therefore, money should not earn interest. Interest is associated with productivity.
Too bad that's nonsense, and that the "therefore" isnt one at all.
I assume you think you are a great mind because otherwise you think you can make a sophisticated guess about who are and who are not.
Certainly greater than either Einstein or Keynes when it comes to economics.
Money is not productive and therefore, money should not earn interest. Interest is associated with productivity.
Interest is associated with time preference and nothing more. Money is merely a medium of exchange, a remedy for the lack of a double coincidence of wants and a remedy for uncertainty in virtue of its wide acceptance. Interest earned is in terms of money, not "on money"; might as well earn interest on wheat (or any good) lent out and then exchange it for money, as this is exactly what happens with money anyway, irrespective of whether it is in that particular order or not.
niphtrique: Interest is of course highly debated because people do not like the idea of God wanting something they do not want. So they try to change definitions. Usury definitely was defined as the charging of interest (and not excessive interest). However people do not like that idea because they think they have the right to something (be it interest, gay marriage or social benefits).
Interest is of course highly debated because people do not like the idea of God wanting something they do not want. So they try to change definitions. Usury definitely was defined as the charging of interest (and not excessive interest). However people do not like that idea because they think they have the right to something (be it interest, gay marriage or social benefits).
Even if you take that position you have to explain why usury was allowed to be charged to non-Jews in the OT. Further why the forbidding of interest carries forward into the NT with the locus of the kingdom of God not being a piece of land with the Israelites but in Church.
I assume you'll ignore Hulsmann.
sapSUCKER:Someone set us up the bomb.
Correction: "someone set up us the bomb" :)
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David Z
"The issue is always the same, the government or the market. There is no third solution."
Here is something to think about:
If someone brought a 1/10 oz gold coin to the bank in the year 1 AD, and the money remained there until the year 2000 AD, collecting a yearly interest of 4%, the amount of gold in the account would have been 3.6 * 10^31 kilograms of gold. This is 1.9 * 10^27 cubic metres of gold weighing 317 times the complete mass of the Earth.
Interest on money is not sustainable. It will lead to economic collapse or the devaluation of the money unit. If you have the ability to see long term, you may see that interest on money needs constant growth which is not possible.
Rome lasted only 700 years. The money system was based on gold and silver. In the beginning Rome was able to expand, and therefore capital could grow faster than interest charges. But after 400 years the expansion was over, and slowly growing debt was becoming a drag on the economy. The government was permanently short of funds. The value of money was constantly devaluated. The military was also badly funded, and therefore other people could invade Roman lands. Debt was destroying Rome.
However the corn receipt money system in Egypt lasted more than 1,500 years without Egypt needing to expand.
you have missed the point. I suppose you have made this a lifetime habit. good luck to you.
you will need plenty of it.