Consider the problem.
A New Nation with no money. Zero.
What to do?
We know from the exponential growth in debt since 1781, that it was a mistake to base the money supply on interest-bearing debt. As a sociologist, I think that the proper foundation for a national money supply is citizenship.
Citizenship
When a person registers to vote, they are declaring themselves responsible for voting for persons they regard as representing their best interests. At that time, they receive what we call "the right to vote." That means, in effect, that they are given votes. These votes are the lifeblood of political democracy, essential to its operation.
The votes come into existence for each person when they register to vote. These votes go out of existence for each person when they disqualify themselves for some reason. They might move from the town or state to some other one, commit a crime that causes them to lose the right to vote, or they die. Their votes go out of circulation with such changes. So the quantity of votes in the political system increase and decrease with the number of registered voters.
If you were asked, how many votes are needed for any particular town, city, state, or nation to function properly, the question would require answering additional questions, such as, how many candidates are on the ballot, and are there issues on the ballot that could be voted for or against. We do not normally think of the right to vote as having a quantitative answer, but it does.
In answering those questions, we would be doing the equivalent of the operation in algegra of "solving for the value of x" where x is the number of votes needed for any given election.
We can use the same rationale for the money supply. Money is the lifeblood of an economy, essential to its operation. The quantity of money should increase and decrease with the number of people participating in exchanges facilitated by money. Solving for the value of x, where x is the quantity of money required for the functioning of the economy, would require answering additional questions - similar to those with solving for the number of votes needed for political democracy. Those questions have yet to be identified and answered. However, we cam begin to answer the basic question, what should be done where an economy has no money.
I propose that we follow the example of votes. When a person registers to vote, they would receive an amount of new money - the same for each person. Let that amount of money, for now, be x. Then, the quantity of new money would increase and decrease with the number of persons registered to voter. Notice that the quantity of money would not be affected by actual voting. Voters would receive the money only when they register to vote and the money would be returned when they ceased participating in the money economy.
Citizen Shares
A supporting rationale for issuing new money to persons when they register to vote is based on the business world, specifically, corporations. To incorporate means to combine into one body. In that sense, the United States is a corporation. The Constitution is its charter.
Shares of stock signify ownership of a corporation. For a nation, shares are in the form of money. For the United States, dollars are its shares. Therefore, registered voters have as much right to shares of money as they have the right to shares of votes.
How Much Money?
The related questions have yet to identified, but we can make a beginning at answering the basic question. We know that $1 would not be enough. Nor would $10, nor $100. Some amount above $100 seems appropriate.
"Solving for x," where x is the money supply needed for the economy to function well, requires multiplying whatever the chosen amount of money by the number of registered voters. In the United States at present, there are 150 million registered voters and another 50 million persons elibible to vote but not registered. So, we would multiply any chosen amount of money by 200 million to know the total amount of new money that would be added to the economy.
Answering the basic question, how much money, is also complicated by the fact that the unit of measure, dollar, is named but not defined. We cannot get a good answer by multiplying a known quantity, number of registered voters, by an unknown quantity, dollar. We must first define the value of "dollar" using a known quantity.
The known quantity that defines everything else about an economy is the clock hour. People are paid by the hour, the work day is measured in hours, the work week is measured in days, the work year is measured in weeks. Taxes come due on a certain date. People are expected to join the work force and to retire at a certain age. So let us be consistent and use the hour to define the value of "dollar."
One way to define "dollar" could be the average wage now paid per hour of work. The United States Department of Labor Bureau of Labor Statistics reports the average wage per hour paid to employees on private payrolls at the end of December 2014 was $24.57. Round it to $25.
Now the question becomes, how many hours worth of dollars would be a reasonable amount to issue to a person when they register to vote? A weeks' worth would be 40 times $25, or $1,000, times 200 million registered and potentially registered voters, for a total infusion of new money of $200 billion. One week's worth of dollars could be the quantity we want to use. it would mean that a registered voter would receive one week of wages and then be expected to earn it back during the first week, so they would have $1,000 to pay expenses for the next week, and so forth. The money supply based on citizenship, would be $200 billion.
Just mention adding new money to the economy and you will hear some say, "That would be highly inflationary." I have had that happen even without mentioning any amount of money whatsoever. The "inflationary" response is automatic. We need to temper that response with the understanding that all we have for money now is interest bearing debt. We do not have a money supply; we have a debt burden that has grown to the astronomical size of $77 trillion because of it. In that sense, we are in a situation far worse than a zero money supply. We are in the hole for $77 million million. However, we could still see prices rise with any addition of new money because that is what people expect to happen. We need to do more than just issue $1,000 to every registered voter. We need to stabilize the value a dollar. How do we do that?
We stabilize the value a dollar by making the actual average wage per hour the National Standard of a Fair Average Wage.
A National Standard of a Fair Wage Per Hour
Our corporate charter, the Constitution, gives Congress the power and duty to regulate the value of money (Article I, Section 8, (5)). It has done very little. Remember, as explained in the section, The Debt Problem, the Monied interest took control of the money supply in 1781 and they benefit from an undefined dollar. For one example, they can raise a big fuss about raising the minimum wage from $7.50 as of July 2009 to $10 and say nothing about CEO's receiving $5,000 an hour or more.
I am here proposing the establishment of a national fair wage per hour based on what that average actually is now, $25. More important, however, than an average wage standard is the establishment of a maximum wage standard. Money is not corn. If one person receives a higher wage per hour, someone else must receive a lower wage. When one person is paid $5,000 per hour, that means that a lot of people must receive substantially lower wages. For example, paying $5,000 per hour to one person means that 1,000 persons must be paid $5 per hour less - every hour, every day.
The remedy for inflation is to set a lower and upper limit to income. The Provisional World Parliament meeting in India in 2004 adopted the rule that the highest wage should be no more than four times the lowest wage. That would mean, with an average wage of $25 per hour, the minimum would be $12.50 and the maximum would be $50. Protests that $50 per hour is not enough could be met with acceptance of a higher maximum on the condition that the four to one rule be applied. If $100 is deemed a better maximum, then the minimum wage would automatically rise to $25 and the average hourly wage to $50.
The history of the struggle for a minimum wage bodes ill for adoption of these proposals. If these or similar proposals are not adopted, it is difficult to see how the United States will survive. It is well on the path to self-destruction by the Achilles Heel of all previous empires, namely, astronomical wealth and income inequality, e.g., the Roman Empire, the Russian and French monarchies, and the British Empire.
There is also the obstacle of fear of change. It is never wise to experiment with societies. For that reason, I have developed simulations as one way to test these proposals safely. They are in the webpage, Simulations.
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