Transfinancial Economics

Transfinancial Economics,or TFE is an emerging global paradigm for economic and financial reform. It is concerned with the possible introduction of a Non-Debt Based Economy which would be free of taxation, and interest on credit. It could replace the present Debt-Based Economy which ofcourse has taxation, and interest. However, the Non-Debt Based Economy could lead to a degree of inflation ofcourse but it could be directly, and easily contained with the use of advanced technology.

At the present time there are huge growing global problems. These include food security, poverty alleviation, population growth, and most notably global warming which if largely unchecked could lead to gargantuan economic costs, and massive loss of life.

Though there is arguably more than enough money to change the world the problem lies with legal access to it. In TFE this situation is remedied, and facilitated. It can work with the vested interests notably banks, and corporations in such as way to bring about mass environmental sustainability, and even a high degree of global justice.

Though ofcourse capital in itself is not the complete answer to the problems of the world it is at the basis of them. Thus, our present financial/economic system needs to be urgently addressed, and reformed into something more advanced, and beneficial.

TFE can be viewed as a very advanced form of Heterodox Economics. It may well one day replace, or rather modify out-dated Neo-Classical Economics which still dominates academia, and the policy making of many governments in the developed world, and elsewhere.

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Important Notice to Readers

Please note, and understand that Transfinancial Economics, or TFE is still in the process of research, and development. There are still grey areas to be addressed, and this may well require consultation with relevant experts.......

....At the time of writing (July 2009) due to the financial crisis there has been much global financial instability in which the Dollar notably as the main reserve currency of the world has been put into doubt. However, the International Monetary Fund has been trying to stabilize the global economy with the introduction of Special Drawing Rights, or SDRs. No doubt TFE could add a new dimension to all this but this is not presently discussed here...

....Moreover, a form of limited TFE sans electronic monitoring, (used for checking inflation levels, and explained later on) and similiar to SDRs could if necessary be used depending on context.However, conventional Economic Indicators could be used to check inflation levels (eg. the Consumer Price Index, Retail Price Index, etc). A case in point is the EUs seeming desire to help the developing world financially in connection with global warming/climate change. The amount suggested would probably not be enough as indicated by most environmental NGOs. With limited TFE it would be possible to electronically create new non-repayable money(ie commercial grants), and ofcourse repayable loans in sufficient amounts.This would help fund vital global warming/climate change projects.

Please also note that the kheper essay on TFE is out of date and should be replaced, or modified as its understanding on inflation controls is no longer fully relevant, or authorative in the light of new understanding, and research. As for the p2pfoundation entry presentation here it may be updated now,and again, and if absolutely necessary any corrections will be undertaken in the text.

Basic Summary of TFE

Transfinancial Economics, or TFE believes that taxes, and interest on loans are no longer necessary in the 21st century. It believes in two types of capital "flows" or rather electronic transmissions of money in the economy.

New Non-Repayable Money

This is created, and transmitted into the economy to replace taxation of open democratic government, and grants which could partly, or fully fund NGOs, and similiar type organizations. It is like the non-orthodox method known in economics as Quantitative Easing notably used in the credit crunch.

Since reformed banks of the future would have a highly accurate scientific understanding of the workings of much of the economy they would also be able to produce enough new non-repayable money to ensure that serious inflation cannot in the main occur. Thus, any direct price controls would probably be unnecessary as the degree of "equilibrium", or balance between supply, and demand could on the whole be maintained. Hence,the Free Price System continues to exist.

Yet, as prices gradually rise the value of peoples money would also do likewise. This national adjustment to inflation would be achieved "instantaneously", and electronically via the banks computers.

It should be clearly indicated again that there is a measured creation of enough new non-repayable money which cannot, and does not lead to hyperinflation (eg. the Russian Revolution,the Weimar Republic, the French Revolution,et al). In other words, it does not flood the economy way beyond its rate of growth which is obviously insane.

It is also very interesting to point out here that in cases of hyperinflation there was a mass printing of new money which arguably more easily enters the general circulation of the economy unlike the creation of electronic money as undertaken in TFE.

However, limited TFE(mentioned earlier), or creating "enough" money is perfectly possible without any comprehensive electronic inflation monitoring (explained later).Evidence does seem to suggest this. Thus, urgently tackling something like global warming/climate change in the Developing World as indicated earlier on would be a serious possibility. Obviously, if this is largely non-repayable capital some kind of manual checks, or electronic ones could be used to ensure that it is correctly spent with virtually zero possiblity of fraud.Such transmissions of new money should ideally start to phase in the development of electronic inflation monitoring on a national, and international scale.

Earned Money

This is simply money which is in circulation, or saved in the economy. This is received by business people, and their employees as profits, and/or wages through productive commercial activity, and work. Both new non-repayable capital, and its earned equivalent exist together in the economy.

It is interesting to point out here to that there is a huge amount of non-repayable money already spent into circulation. Here, we are referring to funding given by open democratic governments notably in rich countries such as the EU,and the UK.This ofcourse is earned money. But, interest bearing loans which exist in todays economies are created largely out of thin air electronically by banks via the process of fractional reserve banking also more commonly known as credit creation in economics. This is not earned money but is like non-repayable money of TFE except ofcourse it is repayable over a period of time. Huge donations also exist for NGOs. These can be seen as being non-repayable but they originated as earned money.

What we are trying to say here is that it is clear that if enough new non-repayable money is created it would lead to some inflation but to nothing more serious (ie. hyperinflation). Incidently, cash could still exist, and as in todays world it would make up a near non-existent portion of the entire money supply. These claims ofcourse support what has already been suggested about funding global warming/climate change projects.

Anyway,here is how Transfinancial Economics in brief works.

1. Most self-employed people, and entrepreneurs would have to register their businesses with the inflation authority (replacing the taxation authority, and ofcourse, its legislation).
2. Each product, and/or service has to be registered with special ID codes (like-present day barcodes), and accounting procedures by law would have to be undertaken ideally on a daily basis. This would involve the use of a number of electronic devices (eg. electronic cash registers, laptops, mobile phones,etc)which could transmit accounting data, and in certain cases as money to the inflation department of bank as it is after all electronic information.
3. The bank monitors the incoming electronic info of the ID codes of registered products, and/or services every day. This happens on specially programmed computers which would have powers to instantly compare the market prices.
4. In the unlikely event that there are serious price rises in a part of the economy electronic intervention may be necessary via an array of super-flexible price/inflation controls targetted at certain registered products, and/or services.
5. Due to the advance programming of the banks computers it would also be possible to work out using direct, and highly accurate incoming accounting data to decide how much new non-repayable money can be created with an assessment of potential inflation risk.

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Four Key Implications of TFE

A. New non-repayable money (largely monitored, and possibly paid in instalments electonically) as commercial grants, or as repayable interest free credit would be able to successfully increase productivity, and prosperity more quickly for businesses in a continous fashion. The ideal as far as possible is to bring about a high degree of "simultaneous" growth so that supply, and demand are largely in equilibrium.

B. Carefully targetted comprehensive financial incentives or schemes where necessary would ensure that businesses become genuinely sustainable, and environmentally friendly. Those projects which are commerciallly unviable but vital to the world would receive the "right" subsidies, grants, and interest free loans created ofcourse out of new non-repayable money. This could in part come from governments, and more often, or not be created electronically by special (re-structured) private banks. In other words, we would have something akin to a very advanced form of "Neo-Keynesian Economics".But if desired the private sector could play a far greater role as far as this "interventionism" is concerned as already indicated. Special banks whose financial interactions could be monitored electronically by an independent body, or by the Central Bank (to prevent fraud, or indeed,creating too much credit!)could profit by issuing non-repayable finance (largely monitored electronically ofcourse)for mainly "non-viable" projects notably in the environmental arena.

In fact, financial incentives would increase if any company seriously considers a green approach to their business. This would encourage others to follow suit.Going green is already something appreciated by business to some extent but a TFE stimulus package from the private, and public sector would be far more advanced, and comprehensive than anything else seen before in our world. Admitedly, this could lead to some market distortion which is partly deliberate (to notably encourage the vital need for sustainable green growth which is all-important), and could be addressed to a certain extent with the electronic creation, and transmission of new non-repayable money as instant compensation, or as a form of price subsidy.

C. Charities, or NGOs concerned notably with high ethical issues,(eg. transparency in government, and business, human rights abuses, direct democracy/e-democracy,fairer wealth distribution, etc) and humanitarianism (eg.food relief, AIDs research, heart disease, et al) would probably be partly, or fully funded without the need for fundraising.

D. With TFE it would be possible to reach a situation in which work as we would understand it would no longer exist, or be necessary as technological automation would largely, or perhaps wholly replace labour. It would be possible to create, and transmit new non-repayable money to support people successfully.Taxation using earned money can only go so far as it relies on a traditional comprehension of economic growth.

A more "detailed" list based on the above key implications of TFE are explained in brief near the end of this p2pfoundation entry

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It should be repeated here that some people believe that there is more than enough financial wealth to change the world. This may well be true. But since fairer redistribution is unlikely to happen then the best, and easiest way forward is to create new non-repayable money in a responsible manner, and allowing legal access to it whenever there is a genuine need via some credible agency, or agencies.

What follows now is a more detailed enlargement of what has been stated here along with other relevant information.

Key Decision-Making Bodies

Here, we shall briefly explain who, and what undertakes the decision making process as far as the creation, and transmission of new non-repayable money is concerned.

Open Democratic Government

TFE exists in the context of an open democracy. Future national governments, and local governments could order the creation, and transmission of new non-repayable money from an independent public authority, or from banks, or indeed, the Central Bank. Relevant electronic checks would among other things be necessary to see what the short term, medium term, and long term potential effects of inflation. Moreover, overspending would be curbed to a high degree.

The Banks (Re-Structured)

It is expected that banks, and banking will remain largely in the private sector in spite of the credit crunch. They could be nationalized in full, or in part but this is not a serious issue in TFE. However, they could have special powers to create, and transmit new non-repayable money to certain businesses (notably those serious about becoming environmentally friendly but where there is little, or no commercial viability ofcourse), and also ofcourse repayable interest free credit. The interest would not be paid for by customers but by the Central Bank, or some independent public authority. As for non-repayable grants their cost, or "grant interest" could be treated in a like fashion.

It is clear that a business model could be created for private banks to ensure super-normal profits. They could well become even more powerful than before but with better regulation but not "over-regulation". Thus, they would not loose out even if they would no longer create loans where necessary for governments "deficit spending".

Independent Grant Giving Bodies to NGOs

These, like the above already exist. They notably come in the form of trusts, and foundations. Their job is to decide which NGOs get new non-repayable capital as grants. Their efficiency in doing this could be reformed where necessary.

Thus, donations, and fundraising will be largely unnecessary for most NGOs as they would receive the vital funding to continue their work.

Basic Ethical Arguments for the Creation of New Non-Repayable Money

There are a number of key points which make the concept of new non-repayable money acceptable along with its earned counterpart.

1.All money originates from an unearned source of creation. As such from an objective viewpoint it has equal value to its earned counterpart as it would be legal tender.

2.So-called Free Money already exists to a limited extent (eg government grants, donations, wills leaving money).

3.Critics would like to point out that if new non-repayable money could be created, and transmitted without uncontrolled inflation it would mean that earning it in the first place would no longer be necessary. This ofcourse would lead to the collapse of the economy, and social chaos.

TFE though sees itself as a transitional, or evolutionary process in which we should have the mental maturity to realize that earning money is still essential until the time comes when "full"automation exists, and society becomes "jobless" in a traditional economic sense. It is then that new non-repayable money could play a vital role by helping to bring into existence "leisure-like employments" which would be possible either in a profit, or/and non-profit context. Ultimately, in some future time money itself would be abolished altogether. In other words,a hi-tech gifting economy similiar to something like The Venus Project (originated by Jacque Fresco,a populariser of Technorcracy).

4.Some critics would say that new non-repayable money is Funny Money. Yet, they fail to realize the fact that it already exists as most of the banks create it out of thin air as a loan which is repayable...

5.TFE should be seen as a kind of ethical economics because it sees money as having a High Human Value other than just a medium of exchange because its social, economic, and political implications are huge, and all-encompassing.

Important Moral Arguments for Non-Taxation

There are a number of key arguments for the abolition of direct, and indirect taxation. They are;-

1.Tax raising is absurd especially as it is very possible for new non-repayable money to be created, and transmitted safely into the economy using advanced computer programming.

2.Everyone should be entitled to all their earned money as a human right.

3.It is highly unethical to finance any misuse of government spending.

4. People should be rewarded by a policy of Non-Taxation as they are the actual the main creators of real wealth.

5.Evidence suggests that many rich, and super-rich people are finding loopholes to escape the taxman notably off-shore accounts. This means that people on lower incomes have to "subsidize" the well off so to speak which ofcourse is unfair.

Moreover, it has become very easy to transmit bank accounts to other countries thus making the investigation by tax inspectors difficult.Whether recent attempts to "crackdown" on all this largely succeeds, or not remains to be seen.

6.Quite a number of wars, and revolutions were caused directly, or indirectly by unfair taxes.

Electronic Business Accounting, and Regular Capital Transmissions

Inflation legislation would replace taxation regulations. The former would involve by law highly accurate electronic accounting by most businesses. One common form of it are the electronic registers at checkouts at supermarkets (ie. EPOS/ Electronic Point of Sales). Depending on the commercial situation lap top computers, mobile phones, and other like devices could also be used in this process.

Thus, business people, and/or their staff would by law have to ideally on a daily basis report their transaction accounts electronically to the inflation department of the bank which could in part, or in full be overseen by the public Inflation Authority. Moreover, putting profits into the bank from sales of registered products, and/or services would require declaring their relevant ID Codes, or else it cannot be processed.

In certain cases, the actual electronic transmission of such data can be legally interpreted not only as an accounting communication but also as money simultaneously. The latter it should forever be remembered is at the end of the day electronic data though we hate to think of it as such.

The business accounts in the banks are closely monitored electronically to avoid false accounting, and fraud. This could involve a number of electronic checks, and if any company is found wanting it could be directly fined electronically. This in the main would be largely an automatic process run by advanced bank computer programming.

An Electronic Profile of the Economy

As accounting data, and profits are received together or separately as electronic transmissions at the bank from various businesses a highly accurate electronic macroeconomic picture of the economy of a country can be built up. Thus, future economists would have far better data to forecast trends unlike the Economic Indicators of present day Neo-Classical Economics. All this is ofcourse revolutionary. Such an advanced electronic profile of the economy could include a whole host of other things apart from identified transactions of specific goods, and services...notably the electronic monitoring of fluctuations in wages, and many other forms of identified income in peoples bank accounts. Admitedly, all this raises too questions of privacy, and disclosure. Thus,good thought-through legislation would be necessary to deal with such issues.

Advanced Computer Programming

With the influx of accounting, and transaction data of registered goods, and services the banks computers would be well-programmed to do the following which includes:-

a.Instantly comparing prices of registered goods, and services.

b.Be able to monitor changes in the monetary supply that are seen as inflationary in parts of the economy due to registered transactions, and accounting data received electronically by the bank.

c.Be able to detect potential high risk inflation, and be able if absolutely necessary to target the relevant prices of the registered goods, and services concerned which may be causing "problems". After informing the relevant bank customers an instant temporary electronic control, or controls may be used to alleviate the situation. This is discussed a little later. However, it should be stressed that all this is highly unlikely to occur if the electronic inflation management is undertaken properly.

d.Using existing in-coming accounting data it would be possible with the right computer programming to work out and see the sort of potential inflation levels which could take place in relation to specific transmissions of new non-repayable (and/or repayable)capital in connection with projects of one sort, or another. A set of low, high, or higher potential risk assesments on inflation could be given automatically. In other words, an electronic model could be used to "stress test" the robustness of financing in full, or part a project(s) in relation to the actual economy itself.

The creation, and transmission of an electronically measured amount of new non-repayable money to relevant bank accounts could be decided by computers, or by the human decision-making process, or ofcourse a bit of both.

e.Another factor in all this is to what degree new non-repayable money is notably contained in productive, and/or non-productive assets, and to what extent it could enter the general circulation of the economy. Thus, an amount of excess capital can be safely created but is more likely to be saved, and this realization would be based on forecasts made on direct electronic data of "saving" accounts.

f.It should also be stated that TFE would have to accomodate for the possible "irrational behaviour" of certain "players" in the economy itself (ie Behaviourial Economics).

As can be see this whole subject can become complex.

The Importance of the Free Market Price

TFE is not to be confused with command/control economics as used notably in the old Soviet Union. We are ofcourse discussing a capitalist system in which most of the time the market price is set freely.To what extent this remains depends on the quality of the computer programming to ensure that only enough new non-repayable money is created responsibly. Thus, elasticity of supply, and demand will continue, and ensure efficiency in the market.

However, the prices of registered goods, and service will start to slowly rise mainly because taxation, and interest on credit (though taxation, and interest would be slowly phased out to zero at the transition phase to ensure everything goes smoothly)would no longer exist. In order to accomodate this the value of peoples money would also rise correspondingly via an instant electronic adjustment to inflation of the entire country.

If any problems do occur there is a number of temporary super-flexible electronic price/inflation controls which can electronically target monetary, or accounting transmissions (or alternatively ofcourse accounting data + monetary transmission = one transmission to the bank as money itself is essentially electronic data)of registered goods, and services. This is explained in brief in the following section of the p2p foundation entry on TFE.

Possible Electronic Controls Over Inflation if Necessary

The following gives us some insight as to how registered products, and/or services could be subjected to instant inflation controls if necessary. These measures are like price controls of the past but are far more advanced because

They are super-flexible.

They do not require a huge bureaucracy.

They can give instant compensation, and/or instant subsidization depending on the situation.

They can correct anything instantly if necessary, and thus any money lost as a result can be re-created by electronic means as money itself is essentially electronic data .

They could if necessary fine people, and companies directly, and electronically from their business bank accounts to ensure compliance to some aspect of inflation legislation.

Please note that what follows is still subject to further development, and more detailed treatment. This would require the help of relevant experts.

There are a number of inflation controls as described below:-

Selective Inflation Adjustment, and Instant Electronic Price Subsidization

This is when the inflated portion of a specific registered product, or service has been electronically targetted as being "over-inflated". It is subjected to an instantaneous, or late inflation check either at the point of sale, or at the bank. If whatever has been bought happens to be over-inflated to say 10% this amount is instantly created electronically into a subsidy which goes straight into the account of the customer. In other words, an "accounting" adjustment. Ofcourse, registered goods could also be instantly subsidized wherever, and whenever necessary at a touch of button.

National Inflation Adjustment

This has already been mentioned but not by name.Here, virtually all bank accounts are indexed-linked electronically to the changing value of money during inflation. Something like this already exists to a limited extent(ie index-linked products, or services).

In TFE new non-repayable money could be created electronically for the bank accounts of customers. This would give rise to more money in ones bank account. Hence, the new higher amount has been adjusted to take into account inflation,and thus, ones purchasing power remains largely the same as before. This is what Keynes referred to as the "money illusion."

Automatic Inflation Deduction

This is when the inflated portion of a registered product, or service is subject to an instant inflation check in which it is reduced to its real value relative to the entire economy of a nation. In other words, the "inflated portion" is destroyed. This can be seen by some as a "tax" but it is not because money in real terms (ie.its real value as opposed to its inflated value) retains its purchasing power as if nothing had happened to it at all.

Electronic Price Capping

Price capping usually comes in the form of Price Floors,and Price Ceilings. In mainstream Neo-Classical Economics they are not highly regarded as they have potential to distort the pricing system, and hence interfere with the free hand of the market.Furthermore, they should be used only as a last resort. TFE has a like view but because of the super-flexible nature of the inflation controls it is not seen as a major problem of note, and if electronic inflation management is undertaken properly it is unlikely to occur.

Bank intervention rather than government intervention in many cases could be involved if temporary Price Floors, and Price Ceilings are absolutely necessary for any part of the economy. This would come in the form of instant subsidies created electronically out of new non-repayable money by the bank (or government).

Price capping can lead to artifical shortages (ie Price Ceilings) and surpluses (ie.Price Floors), and the situation can be easily redressed with the right planned intervention, and financial incentives. This can involve price subsidies, and where necessary instant compensation for any business concerned (eg. if a control price goes below the level of profitability it can ofcourse be subsidized by new non-repayable capital from the bank so the commercial operation(s) involved does not go out of business).

In connection with the above one way to encourage registered prices of registered goods to fall is to create an instant profit subsidy electronically. Thus, a monetary incentive is created electronically to lower prices to a certain level, or levels. The lower the price greater the profit subsidy!! This can be done electronically ofcourse.

Apart from the Registered Economy of registered prices, and services discussed here there is also an Unregistered Economy. The latter only makes up a very small part of the entire economy. It consists of products, and services which are difficult to price exactly, and Code with electronic IDs necessary in the business accounting process. However, if inflation adversely affects them in any way they too could be subjected to temporary electronic price controls (with flexible price ranges), and become permanently, or temporarily part of the Registered Economy.

The benefits of a Non-Debt Based Economy compared with the Debt Based Economy of taxation, and interest on credit are a real marvel for businesses as the following points reveal because it is...

Free of taxes.

Interest free loans would exist.

The possibility of electronically monitored commercial grants where necessary.

There could arguably be no "boom" and "bust" cycles.

The Vital Importance of Sustainability

The world does not have infinite resources. As such it is vital to encourage businesses with the right incentives (notably created out of new non-repayable money)to introduce a variety of approaches which;-

reduce the amount of raw materials used in production of green products, and services.....

re-cycle envronmentally friendly goods where necessary in a closed loop......

re-use green products where suitable in certain ways...

..and/or re-design such goods where necessary whilst at the sametime ofcourse reducing the carbon footprint....

To a somewhat limited extent, all this is gradually being realized, and undertaken. Moreover, a number of businesses recognize the growing reality that green sustainable products, and services can be profitable with the right business model. Some, like a number of corporations are involved in "greenwash" in which the products, and services are not really as environmentally friendly as they appear.

In TFE there would have to be a huge push to try, and bring change into businesses into becoming green. This would involve bank intervention, and to a certain degree of government intervention. The former notably could along with credible information, and consultants be able to create a comprehensive array of incentive schemes backed up by new non-repayable money.Any loss of profits could be compensated if necessary. Indeed, if certain projects involving sustainability in whatever form were commercially unviable these could if there were a serious business plan be fully funded.

The banks (or governments) themselves could also be involved in a degree of demand management in which they could have powers to prevent the overuse of certain limited resources as registered products, and services are continually tracked electronically. Compensation maybe necessary for certain businesses if a loss of profits are involved.

From Competative Capitalism to more Advanced Socio-Economic Alternatives

It should be said that capitalists would make much profit in Transfinancial Economics especially in the first few decades of its full introduction. But, later on it would become increasingly difficult to find new business opportunities as they would be very thin on the ground (ie. resource scarcity). Thus, take-over bids may become increasingly common for existing commercial enterprises (but special NGOs, and possibly willing governments could buy up such assets as they would now have the financial clout).

At the same time there would probably be extensive education especially of the younger generation. This would notably come about via certain NGOs (better financed ofcourse in TFE)concerned with democracy, sustainability, localization, altruism, less "hierachical" social organization, fairer distribution of wealth, and non-competative/co-operative forms of "capitalism" and other socio-economic alternatives. If the pressure of this becomes great enough it may lead to turning the present "greedy" system into something far better, and more advanced in a more ethical sense.

The ultimate aim of TFE is to reach a stage of advanced automation in which money itself will become totally redundant. Ofcourse, work as we would understand it would be virtually non-existent, and superflous. It is expected by then that capitalism would also no longer be needed along with its elites ideally.

Instead, a more advanced hi-tech civilization will emerge in which people rather than money becomes genuinely important. All this would be the expected result of decades of "unprecedented" pressure, and education by the work of high ethical NGOs as already indicated.Yet, ironically, it would be through the "greed" of the capitalist system that the "highest" degree of automation, and green technology would have been put in place on a global scale. In other words, capitalism should be used to ultimately end capitalism.It is also worth mentioning here again the work of the Venus Project which presents a possible technocratic "utopia."

Interest-Free Monetary Reform

Radical monetary reformers tend to concentrate on banks, and the banking elite.These commercial enterprises electronically create most of the money of the world out of thin air as a repayable loan, or credit with interest ofcourse via a process known as fractional reserve banking, or credit creation as it is commonly referred to. The limits of this process are strictly speaking determined by existing amounts of money held in reserve.

Cash though produced by governments only makes up a near non-existant portion of the present financial system. The aim of the monetary reformers in question is to try to bring about interest-free loans which would be beneficial to society, and the economy. Obviously, this is unlikely to happen due to the power of the banks.

In TFE ofcourse banks (along with other "non-financial" companies)could continue to lend at interest but this would not be paid for by the customer but rather by an independent public body, or the Central Bank as mentioned earlier. The amount could still be adjusted to encourage competition.

It should be said that banks could create their own wages for their employees via the production of new non-repayable money. This though would be seen as fraud, and prosecution would result. It could also undermine confidence in TFE altogether.

The Central Bank, or an independent public body could also electronically track, and monitor a banks activity to avoid anything like this. They can legally pay banks on their behalf with money...which would ofcourse be created ex nihilo.

The Money Markets

They would benefit greatly with the introduction of TFE. It would mean greater predictable sustainable growth, and profitability in the equity, or shares market for investors, plus other monetary benefits in connection with various financial "products" or "instruments".

However, the bond market (the buying,and selling of debt from governments, and corporations) would be partly, or fully phased out gradually as TFE is introduced. This could be replaced by the increasing growth of new, and old financial "products." In other words, the rich, and super-rich could benefit more than before... not ofcourse at the expense of the poor as various socio-economic projects (especially where there is little, or no commercial viability)by governments, businesses, and/or NGOs would be set up in the Developed, and the Developing World on a large scale.

Some Other Implications of Transfinancial Economics

These can be briefly listed:-

Transnational Corporations especially in the Developing World could be transformed into truly ethical, and sustainable businesses with powerful financial incentives for change including profit subsidization on a massive scale.

Universal healthcare would be possible irrespective of whether private businesses are involved or not.

Generous pensions would be possible for an aged population without the need of income created by taxes, and/or by private long-term investments in the stock market. However, the latter could continue to a large, or larger extent if desired.

Grassroots NGOs concerned with poverty reduction in the Developed, and Developing World would be better financed as never before to bring about positive change (ie. a New Global Marshall Plan). Moreover, powerful financial incentives could be created for small and large companies (including corporations)from the Developed World to bring about serious economic growth in the Developing World. Money ofcourse would be supplied responsibly, and would avoid where possible the pockets of corrupt government officials, and their representatives.

NGOs concerned with fairer wealth distribution (or redistribution) such as Binary Economics, and Co-operatives and the like would be financed as never before to become a greater influence on society.

Small "zero growth" self-sufficient, and high-tech sustainable communities could be initially financed with non-repayable capital if the relevant but financially enhanced NGOs put pressure on banks, and governments.

Corporations concerned with oil production, and indeed, the arms trade could be bought up in stages by new non-repayable money via a friendly, or hostile takeover. At present democratic governments plus certain relevant NGOs seem powerless to do much about them but with TFE we have a very powerful solution. This concept is referred to as Ethical Business Conversion, or EBC.

A huge, and dangerous problem facing the world is ofcourse global warming. Capping emissions would certainly help but with EBC it would be possible at the sametime to gradually buy up polluting businesses, and replace them with low carbon, or rather decarbonised ones mass producing green sustainable goods, and services. This could come about by government intervention, and/or banks, under pressure from better financed NGOs.

Of course, there are other implications which we shall not go into here. At the same time, Positive Human Politics could be developed as a global paradigm which brings together as one the best, and most advanced democratic thinking into how a better, and more civilized world could be brought into existence. This subject is not discussed here.

Campaign Activism for Transfinancial Economics

In order to bring about the serious possibility of change from our present debt based economy of taxation, and interest to one which is not debt based a campaign would be necessary. However, a grassroots organization for the masses to challenge banks, and Corporations is unlikely to work though we may be wrong.

To promote this campaign it is suggested here that a professional website would be set up to spread the word of Transfinancial Economics as a serious, and credible proposal if the world is to successfully survive the global problems of the future. It would be sent to people, and organizations that have power, and influence such as government policy makers,academics,financial companies, et cetera. This is probably the way forward.

The TFE website itself would include the following features.

A news update about the campaign progress.

Commissioned papers (initially) by willing economists using econometric models to show the efficacy of TFE in technical terms, including detailed studies on Electronic Business Accounting, and the possible super-flexible Electronic Inflation Controls.

An online Journal of Transfinancial Economics.

A powerpoint presentation of TFE for downloading.

Any endorsements for TFE by any willing experts.

Possible field trials of the electronic technologies involved in TFE. This could be in part, or fully funded by governments, and/or by Corporations.

Some Similiar Notions to Transfinancial Economics

It is perhaps suprising to know that the basic idea of a tax, and interest free economy is not new. In America for example just before the War of Independence from Britain various states were extremely poor, but they hit upon the idea of creating their own money. This in certain cases replaced taxation as we would understand it. In some states though they produced too much of it, and caused "serious" inflation whilst others produced enough of it, and thus served the public good without any economic problems.

Of course, present day LETS or the Local Exchange Trading Schemes, and other similiar complimentary currencies (CCs)are strictly speaking free of tax, and interest. Silvio Gesell, and his experiment with his Free Money, or "stamp scrip" also comes to mind.Yet,such CCs are limited when compared with TFE ofcourse as they simply involve local communities accepting a made up currency as a means of exchange for a very "limited" number of goods, and services.

Abba Lerners Functional Finance seems to indicate in part that taxation is unnecessary except when serious inflation occurs. In other words, it is a way of reducing the money supply to "sensible" levels.He appears to have drawn his inspiration from the economist G.F. Knapp who recommended the concept of Chartalism which he devised.

TFE is often misleadingly associated with Social Credit founded by Clifford Douglas. This essentially believed in the idea of the National Dividend which is also very much like the Universal Basic Income, or UBI. It appears that this could be created by what Douglas referred to as debt-free money, or in TFE as new non-repayable money. This would be based directly on certain economic data, and enough of this debt free capital could be produced so as to not lead to serious inflation. Apparently, like TFE Social Credit believes that overtime taxation could also be phased out altogether.

Theodore Thoren, and Richard Warner who were two respected engineers wrote The Truth In Money Book. It describes something very similiar to TFE, and presents the concept of a Treasury Credit System along with other monetary ideas.

PS A paper on TFE was actually accepted by a peer reviewed journal. However, due to a dispute with the editor/publisher I withdrew it from publication, and at the time of writing (April 2008) a new version has been sent elsewhere.

Robert Searle is the originator of this "work in progress" project. His email address is dharao4@yahoo.co.uk

Intelligent and constructive dialogue is welcomed from anyone via email.

Bio-data, and General Blog.

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PLEASE NOTE. Apologies for any errors in the above text if they exist.