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The following patterns would become manifest:
The conceptual key to understanding this shift involves changing the "arrow of time" in the investment process. Under the present system, the discounted present value of any investment has to be higher than the interest rate of a risk-free government bond. This implies that anything that produces value more than twenty years in the future is basically worthless today, thus providing a systemic incentive not to care about the long-term consequences of our actions. Under the proposed system, the incentive works in the opposite way: income in the future would become more valuable than income today, thereby automatically prioritizing the long-term implications of today's actions.
Once the basic necessities of life are covered, the logical uses of money in this new context would include investing in ways that will reduce expenses in the future (pay back mortgages, improve home insulation, improve energy efficiencies, start one's own food gardens) and investing in anything that will keep, or increase in, value (land improvements, trees and forests, and any- thing else that grows over time). To prepare a nest egg for your grandchildren's college, one logical step is to plant a small forest or have a "savings account" that invests in such activities.
New liquid forms of savings would immediately be offered by the more agile financial institutions as soon as the demand for liquidity in the fixed assets just mentioned increased. This could stem the trend toward disintermediation, because government bonds would yield much lower returns. In general, stocks would be preferred to bonds, thereby making access to investment capital at low leverage the dominant way of financing businesses.
Consumption patterns would evolve toward products with longer lifetimes. Assume that one has $100,000 available and two types of cars are offered for sale: the usual car of today, which costs $20,000 and lasts four years, and one costing $100,000 that lasts twenty years. In today's currency environment it is logical to buy the short-lived car because one can put the $80,000 balance in a savings account and get more value in the long run. With the proposed alternative currency it is logical to buy the long-lived car. Today nobody builds such a car because there is no demand for it. But in the future, it could spontaneously become the type of car in greatest demand. Note that the total income of the car manufacturer is the same over twenty years (assuming no inflation), but that the burden on the environment is much lower. According to the same logic, people would tend to build houses intended to last forever--and spontaneously invest in further insulation and other improvements whenever they have extra cash.
It is important to recognize that there would be no need to provide tax incentives or otherwise "educate" people to do all these things. We just reprogrammed the "invisible hand" of financial self-interest to provoke these actions.
Today, many people try to convince others to act in an ecologically responsible way, but it is in the financial interest to do the opposite. With the proposed system, economic self-interest pulls automatically in the direction of ecologically sound actions. Only by such realignment of economic and moral motivations can we expect truly massive changes in behavior patterns.
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Gesell's initial premise was that money as a medium of exchange should be considered a public service good (just as public transportation, for instance) and, therefore, that a small user fee should be levied on it. Instead of receiving interest for retaining such a currency, the bearer in fact pays interest. In Gesell's time, stamps were the normal way to levy such a charge. Now, the generalized use of computers in payment and accounting systems, as well as the availability of electronic debit cards, would make this procedure much easier and convenient to implement.
Is such an unconventional concept as "charge money" a theoretically sound one? The answer is a resounding yes, and is supported by economists of no lesser stature than John Maynard Keynes. Chapter 17 of Keynes' General Theory of Employment, Interest and Money analyzes the implications of such money, and provides a solid theoretical backing to the claims made by Gesell. Keynes specifically states: "Those reformers, who look for a remedy by creating an artificial carrying cost for money through the device of requiring legal-tender currency to be periodically stamped at a prescribed cost in order to retain its quality as money, have been on the right track, and the practical value of their proposal deserves consideration.(note 5) He concludes with the prescient statement that "the future would learn more from Gesell than from Marx." (note 6) The second part of his statement is now accepted fact. Might he also be correct on the first part?