Bernard Lietaer - The Future of Money - Full Book

Revenue' in determining the demand for money). The fact that the quantity of Terra in circulation would be counter-cyclical to me business cycle would therefore tend to counteract the pro-cyclical nature of the conventional money system.

In summary, the introduction of a GRC would tend automatically to dampen the business cycle by providing additional monetary liquidity in counter-cycle with the business cycle relating to the conventional national currencies.

Theoretical and practical soundness The box on 'Economic tech talk' synthesises some key effects of the Terra for those who prefer a purely economic language.

Conceptually, the Terra is the combination of two ideas: a currency backed by a basket of raw materials which has been proposed by many top economists of every generation, including the contemporary Economic Nobel Prize - winner Jan Tinbergen on the one side; and sustainability fees as originally proposed by Silvio Gesell under the name of demurrage charges on the other.

This second idea demurrage charge on currency - was formally endorsed by no less an authority than John Maynard Keynes. He claimed that demurrage not only makes sense from a theoretical viewpoint, but is actually preferably to our normal currencies.

Chapter 27 of Keynes's principal work, the General Theory of Employment, Interest and Money explicitly states that: 'Those reformers, who look for a remedy by creating 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.'