Congratulations on your new blog "The Just Third Way." Your "Four Pillars" for an economically just society will be stronger and more stable with the implementation of a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union. The euro and other common currencies are showing the way. I look forward to continued pursuit of our common interests and "common cents."This is why we waited so long to get a blog up. It's probably a cliché by this time, but you meet the most interesting people while blogging. This means surfacing ideas that you simply have to discuss, refine, and promote.
Fortunately, CESJ has done some thinking in this area. Norman Kurland's paper, "A New Look at Prices and Money," (The Journal of Socio-Economics, Vol. 30, 495-515), on the CESJ web site fits very well into the idea of a single global currency, an idea which Gary Davis (World Government of World Citizens) has advocated for some time. . . . although I haven't made up my mind about his chosen name for the currency, "Mundo."
Norm says as an interim step he'd like to see the "Afro" as the equivalent of the "Euro," but I'm sure we could come up with other names. Actually, I see no reason why you can't have many names, as long as the basic unit passes at par with all other units without arbitrage or transaction fees. After all, for centuries in Europe, you had Thalers, Talers, Dalers, and even Dollars — the same unit of currency that passed everywhere at the same value, just with a different name depending on where it was predominantly used.
Back in January through July 1999, I published a series of articles on common currencies in Krause Publications' World Coin News, beginning with the Tetradrachms of Alexander the Great, and ending with the then-new Euro, with side trips including the Zollverein and Latin Monetary Union. As I see it, the main problem with a single world currency is that every country is afraid that the most stable country financially will control the process - as the Reichsbank enabled Prussia to control German unification in the late 19th century.
The solution is to make certain that every single individual, whether singly or in free association with others, has the guaranteed right of access to the means of acquiring and possessing private property. That means access to productive credit to buy capital assets that pay for themselves out of the income generated by the assets.
It doesn't mean that the bank just prints money and distributes it to people to buy the assets, however. That would almost certainly be purely inflationary, as people yielded to the temptation to meet their current needs with the cash instead of investing it. Rather, the money to buy the assets must only be created in tandem with the process of financing the asset.
It would work like this. Each person — man, woman, or child — would have the right to borrow an amount equal to a pro rata share of the total estimated capital formation to take place in an economy within a predetermined period. No one gets money ("cash in hand"). Instead, they get the right to borrow money that won't even exist until they locate a project for which there is a reasonable expectation that it will generate its own repayment, and thereafter generates a stream of income.
Such assets will be available for purchase because companies will find it much more profitable to finance capital formation with new issuances tax-deductible, full dividend payout shares that ordinary people can purchase on credit, rather than borrowing directly or using retained earnings. (We have proposed certain tax reforms that would make it advantageous to do this.)
When such a financially feasible project is located, the citizen-investor (CESJ uses the term "capital homesteader") takes the credit voucher along with a prospectus describing the project to a lending institution that has access to the central bank. A loan officer (or whatever the functionary is called) examines the proposal, and either accepts it or rejects it as qualified for a loan.
If the loan officer rejects the project, the citizen-investor would keep looking for a good investment. (Or, more likely, the citizen-investor would have a professional investment advisor do the looking for a small fee.) If the loan officer accepts it, a loan contract is drawn up and the lender takes a lien on the new equity shares the company issued to obtain the financing for its new capital. (In other words, the lender can seize the shares if the borrower can't pay off the loan.)
The lender "discounts" the loan paper at the central bank, which prints currency or creates a demand deposit to purchase the loan paper. This money is turned over to the original lender (probably a commercial bank), which turns it over to the original borrower, who uses it to purchase the newly-issued shares which the company uses to finance capital formation.
To make the loan more secure, the lender takes out an insurance contract ("capital credit insurance") to reimburse the lender in the event the borrower defaults. This satisfies what Louis Kelso called, "The universal collateralization requirement" — in other words, "the money you need to make money."
As the project makes money (that is, as the company pays dividends on the shares), the borrower pays off the loan. The lender turns around and, after subtracting the risk premium and a just profit for the service provided, buys back the loan paper that the lender sold to the central bank. The central bank takes the money, cancels it, and hands back the loan paper to the original lender, who cancels it and the lien on the project. The original borrower now has clear title to the project — and the right to use the future income as he sees fit to meet living expenses.
A single global currency would, obviously, facilitate this process — as would the establishment of a global "natural resource bank" or network of Community Investment Corporations, in which every single individual could have a defined and direct ownership stake in land and natural resources.
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