Bernard Lietaer - The future of money

Terra unit is expressed in terms of a representative basket of commodities and services, it keeps P constant by definition. Fisher's equa80n therefore shows that G, the total goods and services exchanged, would necessarily increase with the introduction of a GRC, thereby improving overall economic wall-being.

Last but rot least, the use of a GRC in complement with conventional national currencies would automatically tend to counteract me prevalent business cycle, thereby improving me overall stability and predictability of the world's economic system.

This is so because there is always an excess of raw materials when the business cycle is weakening (weakening of raw material picas is one of the key indicators of a recession). Corporations would therefore tend at this point of the business cycle to sell more raw materials for storage to GRC Inc., which would pay for them with Terra. The Terra would be used immediately by these corporations to pay their suppliers, so as to avoid me demurrage charges. These suppliers in turn would have a similar incentive to pass on the Terra as medium of payment. The spread of this increased incentive to trade would therefore automatically activate the economy at this point in the cycle. On the contrary, when the business cycle is in a boom period, corporations have a systematic incentive not only not to sell new inventories to the Counter trade Alliance, but even to cash them in to have access to the raw materials themselves. This would reduce the amounts of Terra in circulation when the business cycle is at its highest thereby cooling off the economy at this point. At the peak of the cycle, it is even possible that no Terra remain in circulation at all (which does not preclude their continued use as contractual reference currency).

Both Keynes and Friedman have shown that with conventional money, the velocity of money is pro-cyclical (each for different masons: the former on me basis of changes in interest rates, the lathe on the basis of the predominant role of Friedman's 'Permanent