A Better Monetary System

It is axiomatic that every independent nation has monetary sovereignty. That means the people’s legislative body and the resultant Government have the constitutional authority to declare what shall be the nation’s legal tender in whatever form they so choose, digital or physical.

In today’s world, access to “money” has become an essential tool for the survival of almost every person living on this planet.

The equitable distribution of a nation’s “money” system has been a perennial problem throughout history. A problem that has never been resolved, probably because finding a satisfactory solution has never been tackled. However, the distribution of that legal tender is a major link between the Government, the people and the banking system of the private sector.

Whilst, in truth, there can never be any shortage of legal tender, the way the “money” supply is spent and distributed should always be done on a proper due diligent and accountable basis by both the Government and the private sector banks.

The fundamental purpose of the private banking system should be to distribute the nation’s money supply to the private sector in facilitating the vast array of wants and desires of the people, but always on a proper due diligent basis.

No Government has the imagination, ability or responsibility to do this to the degree that is needed.

The government’s role should be restricted to supplying the essential needs of the society but those needs must not be conditioned by the requirement to make a profit. Governments are created by the public to support and provide the essential needs of the public and not to exploit the public by profiteering.

The Government, through a monetary authority, functioning according to specific constitutional parameters, should SELL to the private banks, access to interest-free money, which a monetary sovereign Government can always create on demand.

Essentially, the constitutional parameters would restrict the unlimited creation of money and the resultant harmful effects of inflation and deflation. The parameters would do this by requiring a relative balance between the cost of production and the funds available for the consumption of that production. It is obvious that there is no point in producing anything unless it is going to be consumed at some point in time. Both these parameters will be linked to the nation’s population levels.

After purchasing a requested amount of “money” from the monetary authority, subject to a proper due diligent analysis of the proposal for borrowing, the private banks can then pass that “money” onto the public interest-free,. This way, the banks would serve their role in distributing the “money” supply to the public and act as intermediaries between the people and the Government. The banks would be allowed to charge a competitive admin fee over the period of the loan that would include the initial cost of buying the “money”. The banks would not be allowed to charge and compound the interest but could add a competitive profit margin.

The additional benefit of this concept is that the Government could eliminate every tax now imposed on the economy by simply charging the banks a fee of 1% to 2% of the amount of “money” requested. (This is statistically proven from data provided by the Central Banks around the world.) The Government could spend this revenue on the basis of a budget relating to due diligent assessed commitments.

With regard to the question of accumulated debt, it should be noted that any Government with monetary sovereignty does not have to borrow “money” from anyone and certainly would be prohibited from doing so in the future when this system is in place. However, reducing the existing Government debt burden can be addressed in two ways. The best option is for the Government to simply create the necessary funds and progressively buy back the debt in a planned manner that would minimize any impact on the economy. Alternatively, the Government could progressively reduce the debt by placing a dedicated “levy” percentage on the price of selling credit access to the private banks. Effectively, this would be a defacto tax paid by the people who borrow “money”.

While the admin fee and profit margin charged by the private banks would require a continual increase in the “money” supply over time, it would be nothing like the horrendous rate necessary to cater for the compounding of interest charges. Everybody would be far better off and the economy would receive a tremendous boost from the elimination of taxes.