On New Financial Architecture

["Gunnar Tomasson" <tomasson@xxxxxxxx>]

The following is my response to a Gang8 colleague's query concerning the practical implications of the abstract theoretical issues addressed in yesterday's PKT messages on 'Stability' Conditions w/Zero-Cost Money:

 

The practical implications of the Creditary View of Money are potentially vast - and so will be the opposition of vested interests thereto.

The following are key elements of operational Creditary Economics.

1.  Reconstitute and align the operational guidelines of Monetary Authorities at both national and international levels with the Creditary View of Money serving as point of departure.

2.  At the national level, this will require reinstitution of the Monetary Authority's supervisory function with respect to both the Quantity and Quality of Credit Creation by the Financial System.

3.  At the international level, this well require the transformation of the IMF into a World Central Monetary Authority charged with ensuring that failure of appropriate Credit Control at the National level does not
translate into the like failure in the rest of the world.

4.  This will require (a) that all IMF member countries submit to a common Code of Monetary Conduct, and (b) that the IMF institute an updated version of Keynes' Bancor Plan for 'overdrafts' by individual IMF members on the rest of the IMF membership.

5.  A principal objective of the realignment of the operational guidelines of Monetary Authorities (1. above) will be replacement of the Interest Rate Mechanism by an appropriate set of Quantitative/Qualitative guidelines as principal means of domestic monetary management.

6.  Once such realignment has been put in place and made operational, the infusion of New Purchasing Power by means of Loan/Deposit Interest Accruals will be sharply reduced from the levels of the past thirty years.

7.  THIS will open the door for Non-Inflationary implementation of Randy [Wray]'s ELR concept at the national level.

Gunnar