The euro crisis and an upcoming dollar crisis are both related to a bad monetary system where credits are piling up in countries bringing them to their knees.
Allthough both economic systems have different reasons and background for the trouble they are facing. It is both related to the currency itself. It is not the goal of this article to give you the whole story behind it. So just a summary on the US part, since the EU is more complicated.
The United States policy for over decades is to print more money to sustain their politically motivated projects, which are different per president. Some of them finance wars with it, some slash taxes and others use it to build a wellfare system.
In all those cases, not enough money was available and the US goverment expands the monetary system and loans the money on Wallstreet. The bad thing is that it creates inflation, which basically is stealing a little bit from everyone (without telling) but we are used to it so we do not complain much.
What if inflation did not exist ? It is a bit difficult to predict since we have not seen this for quite some hundred years. But in theory the amount of money will grow at the pace that an economy is actually contributing to growth. In time such a country becomes more and more attractive to import goods and service from since the prices are getting lower and lower compared to countries which do have inflation.
What is required for that ?
First you need is that the money is backed by something worth of value and is limited in availability. We used to have gold for that. Gold in itself has limited real value as a resource for production, but has great sentimental value. It is also limited in availability so it worked for quite some time.
My proposal is to use another resource. Energy. Why ?
Everything we do is related to energy, whether we build houses, produce goods, transport them etc.. That means that energy is actually creating value and therefore a good resource to back money. It is also limited in availability, but if we are smart we can create more and thus creating value and the monetary system can immediately grow with that same created value. So that knife cuts both ways.
I specifically want to note that we should not use Oil for this. Oil is limited in availability, but you cannot create it. But with energy you can (think about wind, solar etc..) In fact everybody can produce it. So we migth get two good things out of it. More focus on creating energy, which will literally fuel economies around the world. Let's hope we choose energy resources that do not pollute the earth to much. A second good thing is that we might get rid of bad credit countries which grew on the expense of others.
And last, but not least. We also limit banks in their ruthless efforts to make (or create) money for their own benefit. Banks have a very usefull but limited task in society and that is to distribute money where it is needed. And we should get them back on that specific track. A monetary system that gives them no way to virtually create money will prevent them from trying.
Make no mistake, I do think banks should earn money for their services, but what they have done and sometimes are still doing has been destructive for the world. Governments around the world try to get them back in line with legislation, but that is also not productive since Banks are now all focussed on risk management and therefore again not fullfilling their primary role, which is distribution of money.
Let's see what you think of my proposal, if anything ?
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