Productive Economy, Contributory Economy

8Smart Currencies

8.1. Institutional money and contributory money

The money we use is managed in circuits that have become particularly complicated.

What made the system successful was the trust in the army (in Roman times) and in the State (nowadays), but above all the convenience of these tokens which quickly fulfilled the three functions of the current currency:

• – unit of account: express the value of all goods and services;
• – intermediary of exchanges;
• – value reserve: income can be kept for future purchases.

This form of money was created to promote the exchange of goods and services. In its current form, it is based on the infinite increase in the production of goods and services in terms of quantity and quality.

When a family, a company or a community needs money to undertake a project or a repair, it takes out a loan with an approved institution. In view of the quality of the project and the probable solvency of the applicant, this institution, by a simple game of writing, creates the money requested, but asks that this money be repaid with interest.

The borrower must therefore repay more than the amount lent to them. When they pay back the principal, the money created is destroyed. When they pay back the interest, they create money without knowing it!

This is not a problem in a period of economic growth generated by the rise in consumption, demographic development or progress that allows prices to rise.

However, the restructuring of the productive fabric means that ...