Capital Ownership Group
The use of central banks to
spread ownership
Shann Turnbull
Author: Democratising the wealth of Nations
http://members.optusnet.com.au/~sturnbull/index.html
Alan Greenspan made the following remarks in a speech on "Central Banking and Global Finance" in January 1997 to the Catholic University of Leuven, Belgium www.fame.org/PDF/Gsjan14_R2.PDF:
Where there is confidence in the integrity of Government, monetary authorities can issue unlimited claims denominated in their own currencies and can guarantee, or stand ready to guarantee, the obligations of private issuers as they see fit. Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. They can discount loans and other assets of banks or other private depositary institutions, thereby converting potentially illiquid private assets into riskless claims on government in the form of deposits at the central bank. That all of these claims on government are readily accepted reflect the fact that a government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit. To be sure, if a central bank produces too many, inflation will inexorably rise as will interest rates and economic activity will inevitably be constrained by the mis-allocation of resources induced by inflation. If it produces too few, the economy's expansion also will presumably be constrained by a shortage of the necessary lubricant for transactions. Authorities must struggle to find the proper balance.
This discussion paper has
been written for lay readers. Its
objective is to allow any concerned citizen or politician to participate in a
public policy debate on reforming the practices of central bankers, international
banking, multi-lateral development bankers or the World Bank. Any debate will involve controversy and so
an attempt has been made to ground the arguments in at least some of the
specialist literature identified in footnotes.
Section
two considers why central banking is relevant
to the COG mission of democratising the wealth of nations. It explains that any person can own
wealth-creating assets if they can obtain a loan to finance the self-financing
period of such assets described as “procreative”.
Section three
explains the role of central banks and how they have established a monopoly
funny money system that augments and protects the profits of commercial
banks. It also explains how private
banks create public credit and that central banks can determine the volume and
cost of risk free modern funny money.
Section four
presents some arguments for central banks to implement selective monetary
policies. It explains why they
currently do not have the means to determine if credit creation produced by
commercial bank lending is utilised to finance new wealth creation or to fuel
inflation by financing consumer demands, speculation and/or ownership transfers
in; property, shares, commodities, and derivatives.
Section five
describes how market forces can be introduced to selectively allocate newly
created interest free money to democratise wealth creation. The absence of an interest cost allows
borrowers to pay insurance premiums to fully guarantee loans against
losses. The market cost of the premium
replacing the cost of interest as a means for the market place to allocate
finance.
Section six
considers some of the counter arguments raised against the proposal such as
interfering with market forces, providing subsidies and introducing
inflation. Responses to each are
provided.
Section seven acknowledges that Louis Kelso provided the
inspiration for using central banks to democratise and increase the wealth of
nations. This discussion paper also
offers an alternative approach to the self-interested advise of the IMF, World
Bank and the hegemony of orthodox economic thinking which promotes poor counties
paying interest to the rich for money that they could create themselves.
The language of economists obscures the relevancy of central banks in spreading ownership. The problem is not so much what they say as to what they do not say. The word “self-financing” will not be found in the index of leading economic textbooks. Without this word and the concept it describes, the relevancy of central banking in spreading ownership and accelerating economic growth will remain obscure.
Part of the problem is that accountants obscure the fact that many productive assets generate sufficient cash to pay for them-selves to become self-financing. This problem arises from accountants describing much of the cash generated by productive assets as a COST instead of a RETURN OF the investment! The return ON the investment that accountants’ report is after they have deducted the depreciation cost. Because of this, financial statements do not reveal when productive assets become self-financing or the extent of the surplus value they create after paying all their operating costs.
The term “surplus value” is another key word and concept that is also not used by modern economists. As accountants do not report it economists cannot recognise it and so deny it exists with the often repeated quip that “there is no such thing as free lunch” (TINSTAFL). Yet it is surplus values that allow income and living standard of a community to increase without its members working harder, longer, or depleting natural resources. Sustainable economic development is dependent upon a community acquiring productive assets that pay for themselves to generate surplus values.
Self-financing assets are so
important in establishing self-financing economic development that they need to
be identified with their own name. The
word “procreative” was used by Moulton[1]
to reflect their reproductive character and ability “to make nature yield her
resources more abundantly”. Because
procreative assets are self-financing, anybody can own them provided that they
can obtain a loan to finance their payback period. Hire purchase agreements and leases are common techniques to
achieve this end. So access to credit
determines who can own the means for obtaining surplus values to increase their
income without working harder or longer.
Democratising the access to credit to fund widespread ownership of
procreative assets provides one way to democratise the wealth of nations. Complementary techniques not dependent upon
banking are described in my book[2].
The relevancy of central banking
in democratising wealth is that they control the creation of money and credit
and its cost. However, central banks
generally do not get involved in how credit is allocated. This needs to change. The purpose of this discussion paper is to
consider what sort of changes should be introduced so as to provide a basis for
COG to consider how it might make a contribution in implementing its mission.
For hundreds of years before
The Bank of England became established as the world’s first central bank during
the 18th Century, all banking was highly decentralised to provide
credit on a very localised basis[3]. Decentralised or “free[4]”
banking created as much money and credit as banks thought was prudent. The amount of money loaned out was not
limited to the funds (unspent income or “savings”) contributed to the bank as
equity or deposits. Banks could create
credit without limit. They did this by
increasing the liabilities on their balance sheets to pay the bills of their
borrowers whose loans created matching assets to expand both sides of their
balance sheets. This is how banks to
this day manufacture credit.
As John Kenneth Galbraith[5]
exclaimed, “The process by which banks
create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems
only decent”. It is so important to
understand this process that it is worth describing the process again in a
different way. Take for example the
situation when you borrow X dollars from a bank and you deposit the X dollars
in a cheque account at the bank that pays no interest. The bank has created an asset in the form of
a loan to you of X dollars earning interest and at the same time obtains a
matching interest free liability to pay you or your creditors X dollars. The bank is earning interest on facilities,
which do not need to be funded by either its shareholders or depositors. This is why commercial banks can be much
more profitable then savings and loans associations, building societies and
credit unions which do not create interest free credits and only lend out funds
contributed by shareholders and depositors.
The ability to create credit
without limit to increase profits resulted in many early commercial banks “over
loaning” and not being able to deliver gold, silver, tobacco, wampum shells or
what ever was accepted in the community as hard currency when demanded by
creditors of their borrowers. To
protect citizens, governments established central banks to provide a lender of
last resort facility for the commercial banks on condition that they limited
their credit creation activities and only used as money what the government
defined to be money. In this way
central banks established a monopoly of what could be used as money.
Money used to be a property
right (title deed) to a specified amount of a defined commodity. This is longer the case so we now have
“funny money”. The establishment of
monopoly or “fiat” money by central banks means that central banks control how
much credit commercial banks can create and so their profitability. The establishment of monopoly money by
government also allows central banks to determine the cost of modern risk free
“funny money”.
Bankers often talk about the
need to establish confidence in the system.
For those with a religion, central banking has become the greatest
confidence trick in the history of civilisation and for many without a religion
it represent the second biggest confidence trick. There is need for many fundamental reforms and some of these can
be achieved by using central banks to democratise the wealth of nations.
4. The case for selective
monetary policies
Modern commercial banks
expand their balance sheets and the volume of credit in the economy with little
concern about the economic impact of their activities. Their main concerns are that their loans are
use for legal purposes and they can recover their advances with interest on an
agreed timetable. Security, security,
security is the mantra of commercial bankers.
As a result commercial banks
can be expanding the money supply in the economy by making loans that are use
to finance inflationary consumer demand and/or speculation in, or ownership
transfers of, property, shares and derivatives. When the money supply is increased without a matching increase in
the production of goods and services the value of money is debased. There is more money chasing the same amounts
of goods and services to create inflation.
Inflation is less likely[6]
to arise if there is the credit created is matched by an increase in
output. The problem arises of how to
design an economic system to keep both in balance?
One reason why this question
does not appear high on the agenda of economists is because they do not have
the most suitable words and concepts to think about the problem. Modern economists do not have words to
distinguish between investments that consume wealth and those that create
wealth. Only three new words/concepts
are required for lay persons to understand the solution to keeping the volume
of money in the economy in balance with output to maintain price stability and
better manage booms and busts. The
words are “procreative”, “degenerate” and “consumption” assets.
Degenerate and consumption
assets consume wealth because they do contribute to producing self-financing
cash flows. Only procreative assets by
definition pay for themselves and produce surplus values. This means that procreative asset will
generate sufficient cash to fully pay back and so cancel any loan and expansion
of credit used to finance their construction or importation. Besides contracting the money supply, the
operation of procreative assets increases output in the economy by the surplus
value (free lunch) produced. Increasing
output with a contraction of the volume of money and credit in the economy
provides a powerful way to reverse inflation.
However, not all-productive
assets operate according to expectations.
Productive assets that do not become self-financing will be described as
“degenerate”. Degenerate assets can
still increase production in an economy but the owner of the assets will not
recover all the funds invested. If the
assets were fully financed by a bank loan, then the owner will need to sell
collateral assets used to secure the loan to pay it back and contract the
volume of bank credit. Productive
assets that do not become self-financing are described as “degenerate” because
they reduce the net worth of the owner and living standards. However, they can still increase the level
of output in the economy to counter inflation.
Houses, white goods, private
cars, boats and the like are consumption assets as they also consume wealth but
this is their role. They reflect the
standard of living but they do not generate it. The ability of an economy to increase its stock of consumption
assets and so its living standards depends upon the surplus values generated by
the procreative assets and/or the ability of its residents to work harder,
longer or exploit non-renewable resources.
Degenerate assets reduce the value of its stock of assets and so
degenerate living standards.
Because economists and
central bankers do not use the three words/concepts explained above they do not
have a basis to determine how the expansion of money and credit through
commercial bank lending is allocated between financing procreative, degenerate
and/or consumption assets. If they did
then economists and central bankers would be able to manage the economy with
much greater precision. Instead they
have only what they describe as very “blunt” economic management instruments to
control inflation and smooth out booms and busts. One important initiative being to control the amount of credit
commercial banks can create by specifying how far banks can leverage their shareholders
funds with Other Peoples Money (OPM).
Another way central banks can control the amount of credit created is by
changing the interest rate for risk-less loans between banks. As the rate goes up the demand for loans and
so credit expansion goes down while the opposite occurs with a lower interest
rate.
What economic managers need
is a scalpel sharp policy instrument to selective allocate newly created credit
by the commercial banks between wealth creating and wealth consuming assets in
the economy. How this can be achieved
while also democratising the wealth of nations is next considered.
5. Using markets to allocate
interest free money
Many economists assume that
interest rates are determined by risk.
But this assumption is not valid when central banks use their monopoly
power to impose an interest cost on risk free loans between banks. This can introduce very significant costs to
consumers and bank customers[7]. Artificially forcing interest rates up
inhibits both wealth producing and wealth consuming activities. What is needed is a mechanism for
differentiating between the two types of activities and one that establishes
market forces that will automatically allocate loans to the most promising wealth
creating activities.
This objective can be
achieved in various ways. One way is
for central banks to create interest free loans to finance procreative assets
on the condition that loan repayment is fully insured against loss by
collateral assets outside the banking sector and other conditions considered
below. The loan insurance removes any
risk from the banking system and so, consistent with economic theory, the loan
is created without an interest rate. It
does not cost the central bank anything to create the loan as the money is
created and not contributed by savers who seek a return.
However, the borrower would
have to pay the cost of obtaining loan insurance and this would replace to a
lesser or greater extent the cost of interest.
The cost of loan insurance would determine if the loan was made and on
what conditions of collateral. This
situation already exists for housing loan insurance. Productive loan insurance has been stunted because borrowers
cannot afford to pay both the insurance premiums as well as an interest
rate. Removing the cost of risk free
money would allow a market for loan insurance to emerge. Housing loan insurance has required
government involvement to get it established and the same could apply to
productive loan insurance. A limited
re-insurance facility might be the most appropriate way to provide support.
In practice the loan insurer
would undertake the security arrangements and documentation for interest free
productive loans. The commercial banks
would provide the funds, which they would obtain interest free from selling the
loan to the central bank[8]. The criteria used by to qualify loans for
purchase by central banks would provide a very sharp policy instrument to
manage inflation, booms and busts. The
conditions attached to “qualifying” interest free loans would provide a basis
to adopt “selective monetary policies” but one that harnessed market forces of
loan risks.
There are various conditions
that could be introduced for fully insured productive loans to be provided
interest free. From the perspective of
COG the most important and the reason for supporting the proposal is that the
ownership of the assets be widely held.
A political argument for this condition is that the benefits of the
government monopoly to create interest free money should be as widely spread as
possible to obtain electoral support for the program. An operational argument is that the risk of the project can be
minimised and so the cost of loan insurance by sharing the wealth of the
project being financed with those who are responsible for its existence and
operations. As no business can exist
without its employees, customers and suppliers, it makes good business sense[9]
for ownership and control[10]
to be shared by such strategic[11]
stakeholders. All strategic
stakeholders are recorded in the books of a business and so can be identified
as well as their economic interest as determined by the market prices for their
labour or custom to provide a basis to determined their participation in
ownership and control. In the jargon of
economists, the strategic stakeholders become deferred “residual claimants”.
Other conditions for
qualifying loans to be interest free could be if the project was for a
self-financing local or state government utility. This is a proposed by the Sovereignty Loan program which has a State and Local Government
Economic Empowerment Act (HR 1452) before the US congress[12]. However, ownership of self-financing
projects by political entities creates what Louis Kelso[13]
described as “sterilised capital”. Like
Kelso, de Soto[14] argues that
assets should be made “fungible” to increase the value of negotiable asses
which individuals can own to increase their wealth consistent with the COG
mission[15].
Another condition to be
considered for qualifying interest free loans could depend upon if they are
being used to finance additional productive capacity or only a change in its
ownership, which does not increase output.
The answer may change according to political consideration and the state
of the economy. A potential economic
problem of qualifying loans to finance changes in ownership is that this does
not increase output to offset the increase in credit expansion. However, this may be acceptable in a slack
economy that needs incentives to get moving.
The opportunity for a community to localise control of alien owned
production could provide political reasons for qualifying an interest free
loan. For a country this could also
provide economic advantages by stopping the export of profits and foreign
exchange to service foreign financiers.
These consideration
illustrate how interest free loans allocated by the market cost of non bank
insurance provides a policy instrument for economic management which can be
fine tuned in a many ways to stabilise the value of the currency and dampen out
booms and busts.
6. The counter arguments and
replies
Suggestion that commercial
banks should allocate loans by alternative criteria is attacked on the basis
that there should be a “level playing field” for market forces to compete in
determining how funds should be allocated.
This is a specious argument because there is no market for alternative
kinds of money with central bank hegemony defining of what may be used as legal
tender. There is a market for loans in
the monopoly currency adopted by a central bank but this market is a construct
of their policies. This point is not
easy for many experts to realise as they may have never considered a market for
currencies as proposed by Nobel prize winning economist von Hayek[16]. Nor are there many economists who have
studied what is effectively negative interest rate money. This was introduced extensively throughout
the US during the great depression to replace government money[17].
Another related objection to
the idea of creating interest free money is that it represents a concession or
subsidy with the inference that this is undesirable impost on other
parties. The point that it is a
concession or subsidy has to be accepted but it cannot be undesirable on the
grounds that it creates an impost on other parties. The government or taxpayers incur no cost. However, the commercial banks are exposed to
the loss of earning interest of loans for qualified projects. So there is an opportunity cost to
banks. However, the licence given to
banks to create interest free credits to finance loans to earn interest is a
far greater concession or subsidy from the government. The profits of banks and the returns to
their shareholders is multiplied a number of times by the licence granted by
their central bank to multiply the volume of bank credit available to issue
loans. The problem is that bankers and
some economists consider that this should the natural order of things.
A common concern of experts
and lay people alike is that the creation of any bank credit is
inflationary. The fact that the banking
system continually increases the volume of credit in the economy through the
issue of loans is often overlooked.
This process is required to keep the volume credit and money in balance
with growth of economic activity. Also
overlooked is that the banks do not concern if they loans fuel inflation or the
reverse. Selective monetary policies as
described above would change this situation.
The possibility of the inflationary impact of central banks issuing
interest free loans was discussed by leading economists at the Brookings
Institution in a seminar to discuss “The Economic Feasibility of Expanded
Capital Ownership” on September 30, 1977.
The moderator of the seminar, Nobel Prize recipient, Professor Lawrence
Klein reported “the expansion of Federal Reserve credit will not be
inflationary if the funds made available flow into investment that raises
national productivity[18]”. The arrangements described above insure that
only productive activities are financed and the loan, with its associated
credit expansion, is cancelled either from its own cash flows or those from the
loan insurer.
The idea of Central Banks
creating interest free money to expand ownership was put forward by Kelso &
Hetter[19]
in their 1967 book. They envisaged a
Federal Government owned institution to provide the loan guarantees as was then
provided for home loans by the Federal Mortgage Insurance Corporation (Fannie
Mae). Draft legislation to implement
this proposal has been developed by the Centre for Economic and Social Justice[20]
in the form of a “Capital
Homestead Act”. The web pages of
the CESJ contain a detailed
description and an extensive supporting
literature dedicated to the theory and practices developed by Louis Kelso
and his followers. This presentation
was inspired by Kelso but may not follow all the details of his proposals as
presented in his writings and by his support group associated with the
CESJ.
To provide an alternative
way of introducing the proposals of Kelso this discussion paper has taken the
approach of sharing with readers an outline of how the financial system has
developed and the existence of different types of money and banking. It has also identified some shortcomings in
the language and concepts of orthodox economic analysis that can inhibit the
development of public policy initiatives for improving the operations and
management of the financial system. It
is by considering alternative types of money and banking systems that a more
informed evaluation can be made of the present system. This is consistent with creating competition
for ideas and banking systems!
The need to create wealth
can be just as important as democratising wealth, especially in poor
communities and countries. However, the
shortcoming in much of current economic thinking is seriously frustrating the
creation of wealth. There are two
notable widely held fallacious views.
One is that if a country is not to use foreign finance it must forgo
current consumption to create the savings to finance the investment required
for economic development. However, some
economists like Moulton1 point out, that the “round about method of
capital formation” permits investments in procreative assets to generate the
savings required for financing them. The
use of loan insurance to finance procreative assets provides a much simpler and
efficient technique for introducing this process for financing economic
development than that utilised in the USA at the beginning of last century as
discussed in my “New Strategies” paper8.
The second and related
fallacious view supports the operations of the World Bank, and many other
international financial institutions.
This view denies that the central bank of any country has the capacity
to provide as much finance as required to mobilise its domestic resources
without the need to either forgo consumption or rely on foreign finance. The only reason for any country to utilise
foreign funds is to bridge shortfalls in foreign exchange or to import
technology that is tied to equity investments.
Many foreign loans are made to finance projects that need little of no
foreign exchange. The result is that
development value and foreign exchange is unnecessarily being exported from
poor countries to increase the incomes of the rich creditor nations.
8. Additional references on
Free banking, interest free and negative interest rate money
Bailey, N.A. 1989, ‘Fed Should Share the Wealth’, The Journal of Commerce, May 15, Washington, D.C.
Bailey, N.A.. 2000, ‘A national of owners’, The International Economy, July 30, Washington, D.C. http://www.cesj.org/homestead/reforms/moneycredit/nationofowners-nb.htm
Bennello, G., Swann,B. & Turnbull, S.1997, Building Sustainable Communities: Tools and Concepts for Self-Reliant Economic Change, Ed .Ward Morehouse, Bootstrap Press of the Intermediate Technology Development Group of North America Inc. New York, Revised second edition.
Butlin, S.J. 1953, Foundations of the Australian monetary system 1788-1851, Sydney University Press, Australia,
Douthwaite, R. 1999, The Ecology of Money, Green Books, Vermont, USA.
Dowd, K. 1992, The Experience of Free Banking, Routledge, London.
Huber, J. & Robertson, J. 2000, ‘Creating New Money: A Monetary Reform for the Information Age’, New Economics Foundation, London <http://www.neweconomics.org/Default.asp?strRequest=pubs&strContext=pubdetails&intPubID=31>
Jacobs, J., 1985,
Cities and the wealth of nations: Principles of economic life, Vintage
books, New York.
Kennedy, M. 1988, Interest and Inflation free Money, Permakultur Institut e.V. Ginsterweg 5, Germany.
Lietaer, B. A., 2001, The future of money, Century.
Robertson, J. 1999, ‘Monetary and Fiscal Policy: The Question of Credit Creation’ a paper submitted to Select Committees of both Houses of Parliament, May/June, London. <www.ecoplan.org/tp2000/general/thinkpieces.htm>
Robertson, J. 2000, ‘Financial and Monetary Policies for an Enabling State’, Alternative Mansion House Speech, London <http://www.neweconomics.org/Default.asp?strRequest=newsarchive&strNewsRequest=newsitem&intNewsID=22>
Solomon L.D. 1996, Re-thinking our centralized monetary system: The case of a system of local currencies, Praeger Connecticut. (Forward by Bob Swann).
Suhr, D., 1989, The Capitalistic Cost-Benefit Structure of Money. Berlin, Heidelberg, New York: Springer.
Suhr, D., 1990, The Neutral Money Network: A Critical Analysis of Traditional Money and the Financial Innovation "Neutral Money", University of Augsburg, Paper presented April30 in Brussels.
Turnbull, S. 1976, 'Creating Capital from Credit', The Australian Director, The Institute of Directors in Australia, August, p. 45.
Turnbull, S. 1977, 'Let the Market Correct Itself', The Australian, Op. Ed., p.8, May 25, Sydney.
.
Turnbull, S. 1978, 'How to Finance Development', Jassa, Securities Institute of Australia, No. 2, pp. 11-16, June, Sydney.
Turnbull, S. 1983, What Everyone Should Know About Banking and Money-Especially Bankers and Economists, Australian Adam Smith Club, May.
Turnbull, S. 1983, Selecting a Local Currency, Australian Adam Smith Club monograph, June. Republished in Native Self-Sufficiency, Seventh Generation Fund Tribal Sovereignty Program, Vol 7 #1 Spring, USA, 1984.
Turnbull, S. 1983, ‘Elements of Autonomous Banking’, Handbook of Tools for Community Economic Change, Ed. Ward Morehouse, Intermediate Technology Development Group of North America, First Edition, May.
Turnbull, S. 1986, 'Financing World Development Through Decentralised Banking', in Perspectives in International Development, Ed. Mekki Mtewa, pp.91–6, Allied Publishers, New Delhi.
Turnbull, S. 1986 'Decentralised Banking and Co-operative Land Banks', in The Living Economy: a New Economics in the Making, Paul Ekins, Ed., Routledge & Kegan Paul, London, September pp. 206-209 & pp. 181–98.
Turnbull, S. 1991, 'Micro-economic reform needs financial reform', Australian Financial Review, Inside Back, p. 51, February 7, Sydney.
Turnbull, S. 1992, ‘Notes on the World Kilowatt Dollar’, World Citizen News, Washington, D.C., 6:7, p. 7, September.
Turnbull, S. 1992, 'Creating a Community Currency', World Citizen News, Washington, D.C., 6:7, pp. 5-7, September.
Turnbull, S. 1992, 'Economics and The Laws of Nature', in The Other Economy: Economics Nature Can Live With, Alan Marston, Ed., LBD Publishers, pp. 81–138, Auckland.
Turnbull, S. 1992, 'World Bank is in the Wrong Business: Instead of Making Loans, Teach Self-Financing', World Citizen News, Washington D.C., vol. 6, no. 9, pp. 5-6, November, 1992. Reproduced in Club News, Harvard Club of Australia, Issue # 8: p. 20, 21, December , Sydney.
Turnbull, S. 1993 'Ecological World Money' World Citizen News, Washington, D.C., 7:6, p. 7/8, July/August.
Turnbull, S. 1993, 'Democratic Capitalism; Self-financing local ownership and control', Human Systems Management, 12:4, pp. 333-348.
Turnbull, S. 1994, 'Reforming World Banking: A Step Towards True Democracy', World Citizens News, Washington, D.C., 8:2, p. 12, April/May.
Turnbull, S. 1994, 'Making Money: How to Create an Ecological, Equitable and Efficient Currency', World Citizens News, Washington, D.C. 8:3, pp. 3 & 14,, June/July.
Turnbull, S. 1995, 'The Coming Monetary Meltdown- Take Shelter by Starting Local Currencies', World Citizens News, Washington, D.C. 9:3, pp. 10 &14, Jun/July.
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Turnbull, S. 1996, 'Financing a Social Economy', in Bank Safety and Soundness - The Bergamo Report, Institut für Finanzdienstleistungen e.V. (IFF), Ed. Ufo Reifner, Proceedings of the Third International Conference on Financial Services, 'Bank Safety and Responsiblity towards the Consumer', pp.115–18, Hamburg, Germany.
Turnbull, S. 1996, 'Re-inventing Central Banking', World Citizens News, Washington, D.C., 10:4, pp. 15-16, August/September, http://www.worldcitizen.org/issues/augsep/
Turnbull, S. 1997, 'Wallis's electronic money challenge', Australian Financial Review, Opinion, February 7, p. 31, Sydney.
Turnbull, S. 1997, 'Banking's (And Money's) Digital Future', Book 3, Year 11/12, Business, FINI & 2A Financial Documents, Education Queensland, Open Access Unit, Brisbane.
White, L.H., 1987, Accounting for Non-Interest-Bearing Currency: A Critique of the Legal Restrictions of Money, Journal of Money, Credit and Banking, Vol 19. pp. 448-56.
White, L.H.
1993, Free Banking, (Volumes I, II, &
III) Edward Elgar Publishing Limited,
[1] Moulton, H.G. 1935, The formation of capital, Brookings Institution, Washington D.C. p. 8.
[2] Turnbull, S. 1975, Democrating the wealth of nations, Company Directors Association of Australia, Sydney, http://cog.kent.edu/lib/TurnbullBook/TurnbullBook.htm Review by Deputy PM at http://cog.kent.edu/lib/cairns.html
[3] Einzig, P.1949, Primitive money in its ethnological, historical and economic aspects, Eyre & Spottiswoode, London, Davies, G. 1996, A History of money from ancient times to the present day. rev. ed. Cardiff: University of Wales Press, UK. http://www.ex.ac.uk/~RDavies/arian/llyfr.html
[4] White, L.H. 1993, Free Banking, (Volumes I, II, & III) Edward Elgar Publishing Limited.
[5] Galbraith, J.K. 1976, Money: Whence it came, where it went, Pelican Books, UK, p.29
[6] Bottle necks in supply might still be a source of inflationary pressure.
[7] Take for instance a water supply system fully financed by debt by a local council that was to be paid off over 20 years by rate payers with the interest rate being 1% above the cost of risk-less funds. The Central Bank would increase the cost of water rates by 72% if they made the cost of risk-less funds 5%.
[8] Details of a practical example that I developed for the Central Bank of North Yemen in 1978 when working as a consultant for the United Nations Capital Development fund are contained in my paper 'New Strategies for Structuring Society From a Cashflow Paradigm', presented to the Fourth Annual Conference of the Society for the Advancement of Socio-Economics held at the Graduate School of Management, University of California, Irvine, California, U.S.A. in a "track" on the Third Way, Friday, March 27, 1992. http://cog.kent.edu/lib/turnbull1/turnbull1.html
[9] Supporting arguments are presented in Turnbull 1997 'Stakeholder Co-operation', Journal of Co-operative Studies, Society for Co-operative Studies, 29:3, pp 18-52, (no.88), Manchester, January. http://papers.ssrn.com/sol3/papers.cfm?cfid=196284&cftoken=90592070&abstract_id=26238
[10] The practical means for widely sharing control among diverse constituencies is presented in Turnbull, 2001, ‘The competitive advantages of stakeholder mutuals’, in The New Mutualism, ed. J. Birchall Chapter 9, Routledge, London. An unabridged version of this paper was presented to the 12th Annual Meeting of the Society for the Advancement of Socio-economics, London School of Economics, July 9th, 2000 http://papers.ssrn.com/paper.taf?abstract_id=242779
[11] Strategic stakeholders are defined as employees, customers, suppliers, including those individuals in the host community, without who no business could exist, make a profit or be sustained.
[12] Details of the Sovereignty Loan program can be found at http://www.loansinterestfree.com/index.htm with details of its Congressional supporter for HR 1452.
[13] Kelso, L. O. & Adler, M. J., The Capitalist Manifesto, New York: Random House, Inc. 1958. Kelso, L. O. & Adler, M. J., The New Capitalists, New York: Random House, Inc. 1961. Kelso, L. O., & Hetter, P., Economic Democracy, Random House, New York, 1987.
[14] De Soto, H. 2000, The Mystery of Capital, Basic books, p. 56, New York.
[15] There are many degrees of negotiability that can be introduced to asset ownership. A typology of types of ownership are presented in Appendix IX, ‘The politics of property’ in Turnbull 1978 in Economic Development of Aboriginal Communities in the Northern Territory, Second report: Self-sufficiency (with land rights) Parliamentary Papers Number 438, Commonwealth of Australia, June. Some political and economic arguments to support types of negotiability that can preserve local sovereignty are discussed in Turnbull 1997, 'Should Ownership Last Forever?', Journal of Socio-Economics, 27:3, pp. 341-363, 1998 http://papers.ssrn.com/paper.taf?abstract_id=137382
[16] Hayek, F. A. 1976, Choice in Currency: A Way to Stop Inflation, Occasional Paper 48, Denationalization of Money: An Analysis of the Theory and Practice of Concurrent Currencies, Hobart Paper Special 70, The Institute of Economic Affairs, London.
[17] Fisher, I., 1934, Stamp Scrip, Adelphi Company, New York.
[18] Speiser, S.M. 1986, The USOP Handbook: A Guide to Designing Universal Ownership Plans For the United States and Great Britain, The Council on International and public Affairs, New York
[19] Kelso, L. O., & Hetter, Two Factor Theory: The Economics of Reality, Vintage Books, New York, 1967.
[20] CSEJ at http://www.cesj.org/ This provide links to the Capital Homestead Act and an extensive publications list