A Sustainable Monetary System


#1

Kate already briefly mentioned a demurrage based monetary system in her book. At Happonomy we designed one, including a way to introduce it alongside the existing one. It’s called the Sustainable Money System.

We believe this system can help bring the doughnut economics into reality. We’ll need help to get it implemented though.


#2

I’ve looked over your link and need to study it further.

The abstract is a good list of goals that need to be addressed.

As for as money itself, I’m inclined to see money as a representation of goods and services . . . monetarism if you will where money, to maintain its value, aligns with what’s currently produced.

As far as the distribution of money goes . . . the basic income debate is valuable to illuminate the amount necessary to maintain modest style of life thus opening the discussion as to whether the resources available are there to provide same.

As far as the concentration of money is concerned, this is a separate issue in that those with higher discretionary incomes have the ability to invest in capital assets that extend their income above their individual labor.

All in all this discussion is important if we’re to reach the ‘doughnut’ and I suggest this discussion include the sustainability link between population and resources to add the complete context.

Unfortunately at the moment, most media economist stay focused on what I term ‘happy talk’ economics where the discussion is usually reduced to just ‘more growth’ which Kate addressed the shortcomings in her Ted Talk.


#3

I’ve been pondering quite a bit about the link between money and value expressed in assets and labour/services. I’ve come to the conclusion that it’s actually a bookkeeping nightmare and unattainable. How are we ever going to catalogue all goods and services and the come to an agreement on the quantification of their value in a monetary system in order to determine the total amount of money that can be present in an economy? Add to that the fact that if I pay you a dollar you can use that same dollar to purchase something else after which it can be reused indefinitely … until it meets bank debt in this system.

Here we need to let go of control I believe and let the pricing mechanism create the balance between amount of money and value in the economy. That’s definitely not perfect and it’s messy but when the underlying system provides the right nudges I do believe it will do its job.

In the model I presented there is one semi hard link between the amount of money and what is present in the real world however: it’s linked to the number of living people. And since people can not produce an infinite number of goods and services, it provides a hard upper limit to the total amount of money that can be present in the economy. Of course, this is also influenced by the price system but the real value of a loaf of bread will remain stable, no matter what the price. So, if you convert to a standard measure, where you take the average price of a number of products and scale all prices to that scale, you will have a stable monetary mass. Say for example that the ‘value price’ of a loaf of bread is 1. But the current price is 10. For simplicity’s sake we’ll quantify all value in relationship with the bread. That means the total ‘value money’ in the economy is the current total mass / 10. If the price of loaf of bread rises to 20, then the total ‘value money’ will be the current total mass / 20. This way the ‘value money’ probably remains quite stable in relation to the number of people times their production capacity.