Options for Reforming the Financial System

The IUP Journal of Governance and Public Policy, Vol. 6, No. 3, September 2011, pp. 7-34

Posted: 6 Jul 2012

See all articles by Shann Turnbull

Shann Turnbull

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

Date Written: July 6, 2012

Abstract

The paper presents four non-exclusive options for reforming the economy and the financial system. Three options reintroduce cost-carrying money as supported by Gesell, Fisher and Keynes, but in electronic form. One variant is a government issue redeemable into official money as proposed by the US Bankhead-Pettengill Bill of 1933. A second option is to allow private issues redeemable into official money as occurred during the Great Depression. The third option involves private issues convertible into specified commodities as occurred in Europe in the 1920s. The redemption of a currency into kilo-Watt-hours (kWh) of electricity generated from renewable resources provides a way to create “green” dollars with a stable unit of local value. Green cost-carrying money could make renewable energy cheaper than burning carbon. The fourth option involves using existing fiat money to reduce: (i) the cost of seigniorage; (ii) interest on government debt; (iii) size of organisations considered too big to fail; (iv) tax incentives to favour equity rather than debt; (v) the 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: Central Banking, Financial System, Financialisation, Free Banking, Neutral Money, Stamp Scrip, Supplementary Currencies

Suggested Citation

Turnbull, Shann, Options for Reforming the Financial System (July 6, 2012). The IUP Journal of Governance and Public Policy, Vol. 6, No. 3, September 2011, pp. 7-34, Available at SSRN: https://ssrn.com/abstract=2101530

Shann Turnbull (Contact Author)

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