Solidarity Notes for Greece
A monetary reform proposal by Thomas Greco, from a draft of an upcoming article:
"The focus is on providing liquidity for the Greek economy but it is applicable to any economy that lacks liquidity (means of payment). What I describe below is a step-by-step process to "sanitize and domesticate" political currency to assure its circulation within a community or nation.
- Solidarity loans from people everywhere
"We are all together in this battle for freedom, sovereignty, and a humane world order. People everywhere need to stand in solidarity with the people on the front lines, and right now the front lines are in Greece. It has been suggested that supporters of cash-starved small businesses operating in places such as Greece might help by making small euro loans to them through Crowdsourcing campaigns. Such a program might help some businesses to hang on a bit longer, but liquidity added to the Greek economy in this way would only provide a small amount of short-term relief as euro currency will quickly be drained away from the domestic economy as payments are made on external debts, or to pay for imports, or as people hoard physical cash.
However, there is a way that such euro loans can provide longer term liquidity that would not leak out of the country or be hoarded. Small, interest-free loans to small businesses in a form that must remain in the domestic economy would enable them to pay suppliers and employees and get the economy moving again as the currency changes hands many times prior to repayment of the loans. The euros or other political currencies that are loaned (dollars, pounds, pesos, etc.) need to be sanitized and domesticated.
The way to do that is to first convert the political currency to a parallel domestic currency that cannot leave the Greek economy.
How might it work?
Crowdfunders or peer to peer lenders would provide euros or other currency to an NGO that would act as trustee and would then make loans to selected businesses in the form of Solidarity Notes (SOL). Each SOL note would be 100% backed by euro or other currency deposits like Swiss francs, or better yet, by real assets that will hold their value despite bank failures, deposit confiscation, or debasement of political currencies by the monetary authorities.
SOL currency could then be used by the selected businesses to pay their employees and suppliers who would, in turn, use them to pay for purchases from shops or other providers of desired goods and services. SOL will continue to circulate throughout the Greek economy for the duration of the loan, which might be two or three years, or even longer. As the borrowers earn back the SOL, they will repay their loans at maturity. The NGO will then return to the original lenders the political currency that they provided as backing for the SOL. Whatever income is derived from the political currency investments can be used to cover the costs incurred by NGO in administering the program, and any residual income might be paid out as dividends to the people who provided the capital.
The key to success of this program is to provide the SOL loans to established businesses that have desired goods and services that are already available and waiting for buyers. The goods and services could be food, medicines, clothing, housewares, building supplies, energy, and any other necessities. SOL provides the payment media needed to connect available supplies with unmet needs.
In summary, this is the process:
- Supporters provide an NGO with deposits of euros, dollars, pounds, or other political currency which the NGO invests in various financial and real assets (similar to retirement funds).
- Using those assets as backing, the NGO then issues a private currency, called SOL, by making interest-free, short-term loans to qualified domestic producers and sellers of essential consumer goods,
- To enable reemployment of idle workers,
- While at the same time bringing to market necessary products that satisfy basic needs, without inflation.
- SOL loans are then repaid to the NGO and that amount of SOL is extinguished.
- The assets that backed that amount of SOL are liquidated and deposits are returned to the original donors.
- The process is continuous as new deposits enable new SOL loans to be made.
Although we have been speaking about issuing domestic currencies in the form of printed notes, they might also be issued in digital form as account balances that are accessed by means of credit or debit cards or transferred using newer mobile phone technologies. Each of these has its own particular advantages and disadvantages." (email, September 2015)