Re: A Better Money System?

["John Gelles" <jjgelles@xxxxxxxx>]

	Trond Andresen suggests (in harmony with most
	economists) that spending and lending by private
	parties may be better than allowing inadequate
	demand to bring on unemployment.

	The alternative I have suggested, from a functional
	finance perspective, is for private saving and miserly
	habits to be encouraged. This will allow public
	spending to alleviate shortages in public things,
	like water supply, infrastructure, education,
	emergency and disaster systems, etc., without
	the pain of taxes or fear of inflation.

	     John Gelles       jjgelles@xxxxxxxx
		http://www.rain.org/~jjgelles/


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From: Trond Andresen <trond.andresen@xxxxxxxxxxx>
Subject: Re: A Better Money System?
Date: Monday, November 09, 1998 5:25 AM

At 01:58 09.11.98 -0800, Mason A. Clark wrote:

>    AND, by the way, this adds another to my collection of examples of
>   "the worship of zero" -- the oft-seen assertion that interest rates
>    cannot be below zero -- as if zero is St. Peter standing guard on the
>    number line.   Real interest rates cross the zero barrier freely; why
>    shouldn't the nominal rates do so?

They can do so in a negative interest rate system, a system which has a
zero or a small positive nominal interest rate on loaned money, but a
"use fee" (negative interest rate) on money held or liquid deposits.

This is the "Schwundgeld" (shrinking money) or "Freigeld" proposal
originally due to Silvio Gesell, discussed by Keynes in the GT.
Irving Fisher tried to get this implemented during the great depression
in the form of  "stamp scrip" (the fee was to be levied in the form
of a stamp to be affixed to a bill each month for the bill to keep its
value).
His initiative was blocked by the Roosevelt gvt. in March 1933.

Today this may be implemented very simply with electronic money, the
cumbersome stamp solution is not necessary.

One wonders whether "Schwundgeld" could be part of the solution
for Japan -- get money to circulate without having to increase the
interest rate.
..... [see original]

A Schwundgeld system ensures circulation without these unwanted side
effects. But of course those who want serious discussion of such a
proposal are just cranks...