Political Democracy, Economic Feudalism Bill Miller
-- Page 3 --The Essentials of the Model:The proposed system centers around two novel features (the numbers quoted are merely for illustration. The national economy is complex, and the actual figures will depend on a variety of factors):1) Federal government removes money creation powers (i.e. fiat currency created through theprinciple of fractional reserve) from the private central banking system. Instead, each individualadult citizen is granted the right to create (spend into existence) a fixed amount of new money(say $10,000 per year) that is allotted in monthly installments.
(Note that this is a grant, not aloan.) The goal is to put sufficient money in circulation to fund needed economic activity, but notso much as to cause inflation. The banking system then takes on a more limited role as thelogger and manager of transactions.2) Money so created is subject to a demurrage charge
averaging one percent per month,causing held money to slightly lose value month by month. (On this schedule, money issued on aparticular date becomes valueless in about nine years.)An knee-jerk reaction to #1 will of course be that this is some sort of massive new “welfare” or “government giveaway” program. Not so! No benefit is given away here that is not already beinggranted to the central banking system. We are simply transferring the right to create fiat currencyfrom private institutions directly to the citizenry - cutting out the potential waste, inefficiency, andcorruption of a long string of middlemen. Again, this isn’t such a big step when one considers thatthe taxpayer is the ultimate backer of the current system.This now enables money to be allocated where needed by millions of citizen venture capitalistswho are directly in contact with the pulse of the economy, not an elite corps who may be out of touch - or even at odds with - the needs of the country.Why the demurrage charge? For two reasons: If money is the “life blood” of the economy, it mustflow in order for the system to remain healthy. Circulating money funds business activity and paysworkers. Conversely, hoarded money starves the economy. Accordingly, money that is worthmore today than next month is likely to be put to work now rather than later.Secondly, money that is held does no work - and will lead to inflation if supplemented with moremoney. Therefore, money needs to have a lifecycle. Currently, money is ultimately removed fromcirculation by taxation, loan repayment, and inflation - all rather objectionable methods, judgingfrom popular sentiments about each. In contrast, demurrage gives a precise schedule for thelifecycle of each dollar, and puts the end user in charge of the amount of value he or she controls.If you’re worried about the effect of demurrage on saving for the future, remember, next year (andevery year), you’ll have at least another $10,000 to work with.For rough illustration then, with a population of 300 million adults, three trillion in new moneywould be pumped into the economy each year. The demurrage charge renders each issuancevalueless in about 9 years, so by these numbers, the economy would eventually stabilize withabout 13.5 trillion dollars in circulation. If this proves to be recessionary or inflationary, the annualallotment would be adjusted accordingly.
Note: in keeping with the times, this system is all handled electronically by debit card, and bycomputer or smartphone for those who are more technically savvy. This saves the cost and risksof printing and managing a vast amount coins, bills, checks, renewal stamps and the like.
“Demurrage” is a fee imposed for holding an asset longer than is intended - for example, thestorage charges for parking a vehicle for an extended period.