I think that you are missing the cause of the problems we are experiencing.
We have a monetary system with a flaw. Interest is a positive feedback loop that forces the system to grow continually. Because all our real world is dependent on the monetary system everything we do has to show growth every year. If it doesn't grow it is an economic failure and goes bankrupt. The problem with things that have to grow in order to survive is that eventually they reach limits imposed by their environments and they die. We are reaching the limits of expansion and we are experiencing collapse.
Yes we need a new monetary system. It will have to be interest free money so people will not want to own it. Money will be owned by the Government (read people) - whatever form of Government, and it will be handy for bookkeeping. Local currencies are fine, but unless the 'business as usual' people change their ways we will still have very rich people wasting and polluting all the resources that we need to survive on.
A serious problem with the monetary system is that, accepting that the currency itself is only a token of value, it is either backed up by something that has an equally fictitious value such as gold or silver or it isn't backed up with anything. There is talk of backing the dollar with oil. Great! Fantastic! Let's get ourselves even more committed to oil consumption!
How about backing it with grain? It has to be backed with something of universal value. Food has that far more than oil. Let's say the dollar is established at the value of, for example, a pound of grain. Then the dollar now has a nutritional value. The nutritional value of grain is constant so the value of the dollar remains constant.
The beauty of backing it with grain is that, not only is grain of real measurable value, it can create its own interest. If you plant a pound of grain, you will get the pound of grain you started with plus a lot more. The power is taken away from the FedRez and is in the hands of farmers (for the first bloody time in history!!!). The government cannot print more money unless they have the grain to back it so they are dependent on the farmers to grow the currency.
I am using the word grain as a generic term for all food seed, not just cereal. All food seed is evaluated according to the nutritional value of the food it will grow so a dollar's worth of spinach seed will be a different weight to a dollar's worth of corn or wheat.
This will encourage local food production because it will boost local economy. Everyone can grow food and what seed is left over after meeting their own needs can be either stored for resowing or banked to convert it to cash.
Money is then returned to its formal role as a universal unit of exchange but it is effectively a token for something of real value that must exist.
Now this idea has just popped into my mind so I haven't thought it through in detail. But then, I don't really do thinking through in detail, as you may have noticed. I'd be interested in the views of others who may understand economics better than I.
Your idea of money backed by grain has some merit and is being attempted.
We have seen attempts to back paper money by various commodities such as gold, silver, oil, grain and even time.
How about money based on trust? We print our own money all the time and this is legal. Every time I write a cheque I create money.
From my website: www.steady-state.ca
You might not have thought of it this way, but we print our own paper money every time we write a cheque. Understanding this simple practice will give you some insight into how our economic system works.
Let us suppose that your friend John has a guitar that you would like to buy from him for $100. You say to him, "I don't have the cash on me right now, so will you take a cheque?" John looks at you and trusting that you will not rip him off, replies, "Sure thing, bro." Now, whether you actually have $100 in the bank is of no significance at this point. You have just written an I.O.U. on a piece of paper and John trusts you. He has confidence that you will honour your promise to pay.
Now if John endorses the back of the cheque with his signature, that piece of paper can now be traded to anyone else just as if it were real money. John exchanges the $100 cheque for a drum set. In fact, the same $100 cheque gets traded many times over and each recipient of the cheque accepts it on faith, with confidence that it is worth the $100 written on it. This can go on indefinitely and whether or not there is $100 sitting in the bank is not particularly relevant. The system functions entirely on trust, on consumer confidence.
Then one day, many years later, you sell your old computer for $100 and the buyer offers you a cheque for $100. You look at it in amazement and say, "Hey, this is the same cheque I wrote out to John ages ago. The son-of-a-gun never cashed it. I always wondered what became of him and my cheque. Look, it even has my signature on it." You willingly accept the cheque in exchange for your computer. Then you ponder what you should do with it. After no more than a few seconds you quickly realize that the piece of paper is worth nothing to you. You just rip up the cheque and toss the pieces in the dust bin.
In the same manner, government can pay its bills by printing its own money. When the government receives tax payments with the same money, its original I.O.U. is cancelled or redeemed and the paper money not longer has any value. The government can choose to destroy the paper money or it can reissue it as new I.O.U.
The bottom line is there is nothing sacred about money and does not need to be backed by any real commodity. In reality, money is a debt on future workers.
Money could be backed by the quantity of drinking water that a country has relative to the population and the number of dollars in circulation. Pretty hard to screw around with those numbers and they would have real meaning. It would effectively be what you have to pay for a litre of drinking water which makes as much sense as relating it to the cost of an oz. of gold.
Relative value of money is controlled by the market. The perceived value of anything can be manipulated and whatever value material selected to 'back up' the money changes so money can not have any fixed value. Don't bother even trying to solve that one.
What can be fixed is the removal of the interest bearing condition of the money. The total amount of money in a country should be equal to the total value of the goods and services (value) of the country. But since every dollar is owned by someone who expects to collect interest there has to be more dollars in circulation at the end of the year. We then print the extra so that people (bankers) can be paid the interest which reduces the money value of all the assets or we don't print it and let a bunch of people go bankrupt.
In the beginning the King minted coins and paid people to build a road. Then he charged a toll to use the road and got his money back. Nobody collected interest and it worked just fine thank you. When more money was needed to make trades the King loaned money to his Lords and Ladies and the Lords and Ladies paid people for work and sold their produce to get the money back. Look up 'Tally stick'. - This is your local community currency model. It works. What doesn't work is The Federal Reserve (a private company) printing money and loaning it to the Government at interest. Lincoln's 'Greenback' was interest free money which is why he was killed. Who controls the money supply controls everything. When individuals are allowed to own money they can control things (capitalism) for their own good at the expense of everyone else.
Without money your vote does not count because your Government does not control the money supply.
I have just realized that-
Money is the same as credit when the interest factor is removed. This means that people can be paid with credit which they spend the same as money.
Every citizen could be given a monthly credit (basic living allowance) and anyone who feels entitled should be able to exercise SDR (Special Drawing Rights). We have to give more credit to the people who contribute more to our well being.
This could be implemented by any Government. Very easy for the Canadian Government that owns the Central Bank and could issue credits to every Canadian without changing any legislation. We each get issued a Bank of Canada credit card and we put interest free Canadian money into the economy. Citizens who chose to collect their monthly credits agree to have their credit draws public so that the system is not abused.
Thank you Ron.
Ron, I love your thinking! Do you think that this could be implemented within a current "timebank" model? Are you familiar with that? Please contact me and let's talk.
We've had a similar system where I live, called a "Letts scheme". That is putting in time to provide services which entitles you to certain services within your timebank account. Is this the scheme you mean?
I think this is a good thing to operate anyway regardless of the economy model in use. I'm not sure how it could be implemented as an overall replacement for our economy but, if workable, it would be good. What about those who are unable to put time in for whatever reason?
Been a while since I was here. I see that I left with some things not too clear. I propose that the central bank not loan money to the Government. it loans money interest free to individuals. When entrpreneurs make a profit the money is deposited back into the bank where a small % is deducted for the repayment.
So the money gets loaned to individuals in avery transparnt manner - we are the managers of this thing and we control the formula for granting loans. We also set the % repayment which is deducted from the deposits. Everyone has a debit/credit card and most of us will be running up a debt until we find something that others will employ us to do.
Latest thought is a way to get this interest free money into the economy. I thought that if we had a virtual currency like an Ammero which could be converted into any other currency at an exchange rate equal to some kind of average value of the USD the Cnd dollar and the Mexican Perso, we could loan it to debtors forced into bankruptcies. The debtor would use this interest free money to pay off his debt and repay the Ammero bank as a % of his income. The creditor who obviously made a bad loan gets repaid the full amount owed but the Ammeros he gets as payment are non interest bearing. They can be spent but not loaned to others at interest.
It's a good alternative to what we have but then, the concept of money was a brilliant invention initially. Any new way of dealing with a monetary system is prone to the same corruption as the current system. The essence of the problem is the fact that we are using something of no intrinsic value to represent value. Try eating something that has no nutritional value but represents real food and see how long you can live on it. Do you see the point? If the value of a unit of exchange is decided rather than intrinsic, that value will always be unstable and fluctuating. Who decides the 'value'? What influences that decision?
Resource based economies are based on real value commodities such as food and raw materials, the value of which is inherent in the material according to the uses to which it can be put or the nutritional value it provides. These values cannot be manipulated by those with hidden agendas.
Charles Einsenstein's "Sacred Economics" makes a long but valuable read: