The global monetary system is no longer fit for purpose and requires radical reform to promote sustainable and equitable economic development, independent consultant Shann Turnbull told the annual Association for Heterodox Economics conference in Glasgow last week.
He said that money is increasingly seen as a store of value. This is encouraging resources to be invested in money rather than in productive assets, Turnbull said.
“The only valid definition of money is that it is a medium of exchange that is used to make and receive payments,” Turnbull said. “It should not be a store of value, which encourages hoarding of the medium of exchange, artificial shortages and returns from simply holding money.”
He said at present banks and the government are the sole source money, but anybody should be able to create and exchange money.
“Monopoly money can misallocate resources much more than tariffs or taxes.” Turnbull said.
There are many examples of alternative money including Bitcoin, but a credible medium of exchange should be tethered to the real econoy.
He called for a new approach to money creation based on environmentally-defined units where the value of each unit is anchored to the amount of electric energy that zone produces.
For further information for the Association for Heterodox Economics (AHE), click here.
Democratising a sustainable new economy with speed money, a paper presented at the AHE annual conference in Glasgow on 9 July 2016.sturnbull@mba1963.hbs.edu