the plan for the future
May 20, 2009 - June 14, 2012
The economy does not adequately address the needs of people. In times of crisis many companies go bankrupt because there is no demand, even though they make useful products. Many people will become unemployed, so demand falls back even further. Governments and central banks intervene, which disturbs the functioning of markets. This enables inefficient companies to remain in business when they benefit from government intervention and the intervention in the financial system by central banks.
The fundamental cause of economic inefficiency is usury, which is the charging of interest on money. Without usury economic conditions will improve. The following example demonstrates that interest on money is unsustainable and leads to crisis:
On the opposite side an ever increasing amount of debt is needed that pays for the interest on the money in the bank account. At some point this leads to crisis. Economic crises and the destruction of useful capital are the result of the type of money we use. The same applies to the perceived need for government intervention in the economy. Our money is an important factor in poverty, the unraveling of social structures, the destruction of nature and the mass migration of people. Usury is a system of slavery, and over time it is unescapable that usury reduces most people to a state of servitude to the usurers. This is a mathematical certainty.
It is possible to achieve a much greater prosperity, with maximum capital growth without inflation, large debts, economic crises, unproductive government intervention and the unproductive part of the financial sector. Natural selection will ultimately determine the most efficient economic system, despite the political power structures that still exist at this moment. The investigation of alternatives and dissemination of knowledge will accelerate this process, but the ultimate outcome will not change.
Natural Money is the most efficient monetary system that will therefore become the dominant monetary system of the future. Natural Money will result in constant economic growth at maximum potential and will therefore make other monetary systems obsolete. Natural Money has the following characteristics:
- a holding tax, which amounts to 0.5% to 1.0% a month;
- a complete ban on usury, which is charging interest on money;
- a money supply that is constant;
- a complete ban on credit, which is creating money out of nothing.
The basic concept of Natural Money can be explained using the following ten steps:
Natural Money creates more employment. At the same time the number of people in unproductive occupations, such as finance and government, will be reduced. Government intervention in the economy for social, economical and ecological reasons will be less needed as the desired goals will achieved automatically. This makes an economy with Natural Money more efficient than an economy based on usury.
Natural Money in history
The miracle of Wörgl
There are a number of successful examples of the introduction of money with a holding tax. Wörgl is the best known example. During the Great Depression, the Austrian town of Wörgl made economic history by introducing a complimentary currency. The mayor Michael Unterguggenberger had a long list of projects he wanted to accomplish, but there was hardly any money with which to carry them out. Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as 'stamp scrip'. The Wörgl currency required a monthly stamp to be stuck on all the circulating notes for them to remain valid, amounting 1% of the each note’s value.
Because nobody wanted to pay what was effectively a hoarding fee, everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. This offer was rarely taken up though. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge.
The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the Schilling. This in turn increased trade, creating extra employment. At the time of the project, unemployment in Wörgl dropped while it rose in the rest of Austria. Six neighbouring villages copied the system successfully. In January 1933, the project was replicated in the neighbouring city of Kirchbuhl, and in June 1933, two hundred Austrian townships were interested in adopting the idea. At this point the central bank panicked and decided to assert its monopoly rights by banning complimentary currencies. The people unsuccessfully sued the bank and later lost in the Austrian Supreme Court. It then became a criminal offence to issue 'emergency currency'.
Joseph in Egypt
Money with a holding tax was first introduced when Joseph was viceroy of Egypt. When the pharaoh had dreams about seven fat cows being eaten by seven lean cows and seven full ears of corn being devoured by seven thin and blasted ears of corn, Joseph explained the dreams to the pharaoh. He told the pharao that seven good years would come and after that seven bad years would follow. Joseph advised the Egyptians to store food on a large scale. They followed his advice and built storehouses for food. In this way Egypt survived the seven years of scarcity.
What is less known, because it is not recorded in The Bible, is that the storing of food resulted in a financial system. The historian Friedrich Preisigke discovered that the Egyptians used corn receipts for money. Farmers bringing in the food, got receipts for corn. Bakers who wanted to make bread, brought in the receipts, which could be exchanged for corn.
Because Joseph took all the money from them (Gen. 47:14-15), the Egyptians had to invent an alternative currency. Therefore it did not take long before the corn receipts where generally accepted as money. Because of the degradation of the corn and mice eating it, the value of the receipts was steadily decreasing. This enticed people to spend the money fast.
The situation in Egypt was similar to the situation to Wörgl during the Great Depression, where money effectively ceased to function. The corn receipt system in Egypt remained in operation for more than 1,500 years. It did not collapse but was replaced by Roman money when the Romans took control over Egypt. Therefore this monetary system must have been stable and satisfactory.
When interest on money is charged, money in the future is worth less than money now. This has a major impact on investment choices. Interest promotes investments that are unsustainable and wasteful. Without interest, sustainable investments will be more attractive.
Natural Money will have the following effects:
- Natural Money helps to save the Earth and nature by promoting sustainable investment and recycling;
- Natural Money helps to free people and countries from debt slavery;
- Natural Money helps to end unemployment without government intervention;
- Natural Money creates a stable economy without crisis;
- Natural Money helps to end senseless economic activities in the financial system that destroy the economy;
- With Natural Money there is no need for government and central bank intervention to stabilise the economy;
- With Natural Money there is little or no need for government intervention to achieve social objectives and to live in harmony with nature;
- The introduction of Natural Money will result in a dramatic rise in government income which makes it easy to lower taxes and address the social problems that now exist in society.
Natural Money economies will perform better than all other kinds of economies. This will attract investment capital and will force all other economies to adopt the Natural Money system.
Stimulating local trade
Currently a producer such as a farmer only gets a small portion of the price for which a product is sold in a supermarket. Farmers and small producers have little bargaining power compared to large supermarket chains. If products could be produced and sold locally, then both producers and consumers could get a better price. This will greatly improve the efficiency of the economy. Trading people that were between the producer and the consumer will then have to find a productive occupation, which makes the economy even more efficient.
States and municipalities can issue their own currencies that circulate along with the national currency. If they come into existence, those currencies should only be used for payments within the state or the municipality issuing the currency. People will be inclined to spend the local currencies first because they can only be used locally. This will stimulate local trade at the expense of long distance trade.
Local currencies have the following advantages:
- They promote local trade and therefore generate employment in the local community.
- Local production will replace centralised production which makes the economy more energy efficient.
- Local currencies will generate tax income for local governments.
- Local currencies give local communities more possibilities to handle their own affairs making the central government less needed.
Natural Money can bring the local economy to life, just as it did in Wörgl, Austria in 1933. Local Exchange Trading Systems are trying to achieve the same [+]. However the primary goal of LETS is not to provide a financial system but to help the members of the community. Also LETS is based on trust and LETS systems are mostly practiced on a small scale. Therefore many LETS systems choose a form of free money that is not optimal.
Also public banking is an effort to help the local economy. The Bank of North Dakota (BND), currently the only state-wide publicly-owned U.S. bank, has helped North Dakota in succesfully avoiding budgetary disasters. By providing affordable, low interest credit for business expansion, new businesses and students, the BND has helped North Dakota overcome the credit crisis. Other states are planning to copy this example.
Without a government making Natural Money legal tender as Wörgl did during the Great Depression, LETS and public banking will not reach their true potential. Therefore a government backed local Natural Money currency will be important in rebuilding the local economy.
Silvio Gesell outlined the theory of Natural Money in the Natural Economic Order. Many famous economists and scientists saw the enormous potential of Natural Money:
- "I thoroughly enjoyed Silvio Gesell's brilliant style. The creation of money that cannot be hoarded will lead to a different and more real kind of property."
Professor Albert Einstein, Nobel Prize Winner
- "Gesell's name will be a leading name in history once it has been disentangled."
- "The application of Gesell's principle of circulation of money will lead the nation out of the depression within two to three weeks. I am a humble student of this German-Argentine businessman."
Professor Irving Fisher, Yale University, America's greatest economist
- "I believe that the future will learn more from the spirit of Gesell than from that of Marx."
John Maynard Keynes
- "Gesell's work will initiate a new epoch in the history of mankind."
Prof. Dr. B. Uhlemayr
- "Gesell's discoveries and proposals are of the greatest importance for centuries to come."
Dr. Theophil Christen, eminent mathematician and physicist, Berne
For most people it is difficult to understand Natural Money. Interest on money appears to be natural and it appears that the economy cannot work efficiently without interest on money. The theory of Natural Money claims the exact opposite: interest on money is unnatural and the economy cannot operate efficiently with interest on money. Money without interest worked well in Wörgl during the Great Depression. It also worked well in Egypt for more than 1,500 years.
Most people will not believe that something will work until they can see it work. Therefore a banking system is built that can perform all basic banking operations in the Natural Financial System while it can also work with a great number of banks and a great number of Natural Money currencies. The system is expected to become available in the first half of 2012 [+].
The money in Wörgl circulated 14 times faster than the Austrian Schilling while it had the same value. Therefore income in Wörgl rose fourteenfold. The Natural Financial System is far more efficient than the current financial system. We can be many times as rich as we are now. Therefore there is no way of stopping the coming of the Natural Financial System as soon as this knowledge becomes public.
The following information can be found on the Naturalmoney.org website:
- Information about how bad the economy really is can be found here: http://www.naturalmoney.org/howbad.html.
- The Natural Money theory in detail can be found here: http://www.naturalmoney.org/full-theory.html.
- A design for the Natural Money financial system can be found here: http://www.naturalmoney.org/finsectordesign.html.
- A system design for the Basic Banking System can be found here: http://www.naturalmoney.org/basicbanksystem.html.
- A plan for creating a sustainable future with the help of Natural Money can be found here: http://www.naturalmoney.org/buildfuture.html.