Such a system would have the enormous advantage that the governments could create N-Euros without having to borrow from the commercial banking system, which currently has a virtual monopoly on creating the Euro money supply. This would save hundreds of billions a year in totally unnecessary interest payments.
It's pretty much the idea that I presented last week in my blog post "Eureka - Replace the Euro with the N-Euro". But there are a few differences.
First, I acknowledge the debt to all the other alternative currency systems that have sprung up around the world since the first LETS system started by Michael Linton in British Columbia in 1983. There is a very interesting site called the "Community Exchange System" that lists no less than 425 different alternative systems around the world. My proposal is essentially just the same idea, but done at an official governmental level - with the possiblity that the alternative currency can be used to pay taxes. This is a very powerful way of guaranteeing that the alternative currency has real value.
Seccond, after a lot of reflection (and an exchange with John Morrison on the Positive Money Forum), I came to the conclusion that it would be best not to allow N-Euros to be convertible into conventional Euros - at least not officially. The value of the N-Euro should be clearly guaranteed by the fact that each N-Euro is worth precisely one conventional Euro when it comes to paying taxes. There's no need to provide a way for people to swap one for the other. If there was, it would be an invitation to speculators.
Third, I noted one very interesting feature of such a scheme. Since the N-Euros can only exist in one place - namely on the government's computer that keeps tabs on who has N-Euros on their accounts - there is no way that N-Euros can be moved anywhere else. There's no way you can move N-Euros to the Cayman Islands, and no way to hide them under your mattress. The government will at all times know exactly where the N-Euro stock is held.
Anyway, here's the video. Enjoy!
Simon,
ReplyDeleteIn case you haven't seen it, here is one of Prof. Richard Werner's many papers, this one on how to solve the Euro Crisis:
http://eprints.soton.ac.uk/341650/1/CBFSD_2-12_Werner_Euro_Solution_31_Jul_2012.pdf
title
"How to End the European Financial Crisis – at no further cost and without the need for political changes". Some themes are familiar from what I now realise are a very large number of his other papers and articles. On the face of it, there seems no reason why it shouldn't work, and every reason to try it. And of course the UK government should be doing something similar. A little quote:
"If it’s so simple and costless, why has no central bank done this before?
Actually, three major central banks have done it before: the Bank of England, the
Bank of Japan and, most recently, the US Federal Reserve. The result: the operations
were a complete success, as was to be expected. No inflation resulted. The currency
did not weaken. Despite massive non-performing assets wiping out the solvency and
equity of the banking sector, the banks’ health was quickly restored. In the UK and
Japanese case, bank credit started to recover quickly, so that there was virtually no
recession at all as a result."
He goes on to give details, but I won't spoil the surprise. :-)
Best Wishes,
Montmorency, aka Mike Ellwood