Options for Rebuilding the Financial System and the Economy

Posted: 24 Aug 2009

See all articles by Shann Turnbull

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance

Date Written: August 23, 2009

Abstract

Four non-exclusive options are considered for rebuilding the economy with a more efficient, equitable and resilient financial system. A common feature of three options is the introduction of cost bearing money as supported by Fisher (1933) and Keynes (1936) to help stabilise prices. Cost bearing or “Free-Money” increases the efficiency of allocating resources and can result in the generation of electricity from renewable sources becoming cheaper than burning coal. One option for issuing Free-Money is for governments to adopt a Bill like that presented to the US Congress in 1933. A second option is the private issue of “stamped scrip” that circulated in the US during the Great Depression. A third option is the issue of Free-Money redeemable into a commodity as used in Europe 1928-33. A fourth option is to reform the existing financial architecture to reduce the: (i) cost of seigniorage, (ii) interest on government debt; (iii) size of organisations considered to big to fail; (iv) tax incentives to use debt rather than equity (v) different types of risks accepted by financial institutions and (vi) ability of banks and “shadow” banks to create credit to finance derivatives many times greater than the GDP of the global economy.

Keywords: Financial system, Financialization, Free Banking, Neutral money, Stamped Scrip, Supplementary currencies

JEL Classification: B31, D63, E42, E44, E50, G18, G20, H81, P11

Suggested Citation

Turnbull, Shann, Options for Rebuilding the Financial System and the Economy (August 23, 2009). Available at SSRN: https://ssrn.com/abstract=1460086 or http://dx.doi.org/10.2139/ssrn.1460086

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

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HOME PAGE: http://independent.academia.edu/ShannTurnbull/CurriculumVitae
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