Transfinancial Economics
Transfinancial Economics,or TFE is a concept for economic and financial reform developed by Robert Searle.
An Introductory Note.
At the time of writing this entry (April 2008)the existing kheper essay, or "paper" on TFE has not been updated due to a problem with the webmaster. This may change soon. I (ie Robert Searle) include the old link, and also a new one which gives the most up-to-date presentation on TFE, and may, or may not appear on the kheper website. The latter also has a much more advanced understanding of the electronic inflation controls. This does not appear in the kheper essay.
Old Link.
URL = http://kheper.net/essays/Transfinancial_Economics.html
New Up-to-Date Link on TFE.
The following link takes one to my email post (April 2008)found on the Global Justice Movement.net discussion group. The presentation found there should be seen as the most authorative introduction to TFE, and a version of it will appear possibly several times on the internet when one has the time, and the energy. Full weblink address not shown here at present.
Also, the following link gives a clearer, and arguably a more credible means of how to deal with the "final" reversal of price rises. It too comes from a post from the the Global Justice Movement.net...
The above link is entitled Price Rises, and Subsidized Price Decrease in Transfinancial Economics. The Key to Inflation Control (May 2008).
Tax Free, and Interest Free Monetary Reform
This is a brief non-technical introduction to a "new" futuristic monetary reform. It is called Transfinancial Economics or TFE, sometimes called Non-Taxation Monetary Reform. It revolves around the concept that apart from earned money new non-repayable (ie.unearned) capital can be responsibly created without taxation for democratic governments,or indeed, fundraising by NGOs in many cases. This is a "revolution" in our understanding of money and the world. In the right hands, this concept could be one of the greatest breakthroughs of the 21st century and beyond.
There is arguably more than enough earned money to change the world. Ofcourse, it would be highly ethical for it to be more fairly distributed, or rather redistributed as understood in a genuine socialist system. Yet, this is unlikely to occur in the immediate future. TFE recognizes this, and believes that the best way forward is the creation for governments, and NGOs of new non-repayable money along with its earned counterpart. It is realized that greater financial empowerment lies with LEGAL ACCESS to it when, and wherever there is a true need for it. The only other limits to success in such matters is effective planning, and relevant resources.
In normal circumstances, the creation of new non-repayable money in a measured way would probably lead in time to hyper-inflation. However,advanced computer technology and programming could be used to deal with this instantly, effectively, and directly (explained later on).
JUSTIFYING THE CREATION OF NEW NON-REPAYABLE MONEY.
There are a number of key points which make the concept of new non-repayable money acceptable with its earned counterpart.
i) 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.
ii) So-called Free Money already exists to a limited extent (eg government grants, donations, wills leaving money).
iii) Critics would like to point out that if new non-repayable money could be created 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 should be seen 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 comes about. It is then that new non-repayable money would play a vital part in sustaining a largely "jobless" economy as it would notably lead to instead to the funding of "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.
iv) 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...
v) 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.
ELECTRONIC CONTROLS OVER INFLATION LEVELS.
As already indicated inflation levels could be controlled directly without uncontrolled inflation. It is important to understand that Price Controls, and Price Ceilings are avoided to a certain extent, and if used they would be flexible as never before possible. Yet, in TFE prices can self-adjust naturally as much as possible, and this is vital within the present capitalist system. There are a number of electronic methods which could be used to control, and contain inflation levels. These can "indirectly" influence pricing.
i) Automatic Inflation Adjustment.
This is when the inflated portion of a product, or service is subjected to an instant inflation check at the point of sale, or later on at the bank. If whatever has been bought happens to be inflated to say 10% this amount is instantly created electronically into a subsidy which goes straight into the account of the customer. Thus, income, and nominal prices rise at the same time. This avoids serious devaluation.
ii) Automatic Inflation Deduction.
This is when the inflated portion of a product, or service is subject to an instant inflation check in which it is instantly reduced to its real value. 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.non-inflated) retains its purchasing power as if nothing had happened to it at all.
iii) Instant Electronic Retail Price Subsidization.
If parts of the economy have persistent price rises this may disturb public confidence in the monetary system. It is thus beholden by banks, and/or democratic governments to set up a programme of price subsidization created electronically ofcourse out of new non-repayable money. This could in part pay for the inflated portion of the market price of a product, or service,(upto a "flexible" Price Ceiling) and the rest is paid for by the customer with earned money.
iv) Price Rises, and Price Descrease Subsidization.
This is another form of subsidization, and the one which is most likely to be used with the aid of new non-repayable money. As the prices reach a "flexible" electronic Price Ceiling they are encouraged to decrease their retail value otherwise they are fined progressively to zero. However, as a positive incentive to start dropping their prices a subsidy acting as extra profit is instantly created. This could well mean double profit partly created by earned money from the customer, and unearned money.
v) Controlled Hyperinflation.
This should be avoided ofcourse as it is largely unacceptable. This is when businesses deal amongst themselve in "hyperinflated" pricing. However, as soon as it enters the bank computers the money is reinterpreted into its real values rather than its "astronomical" nominal equivalent. The same is true with the retail pricing of services, and products. Businesses have to understand that this is just "a change of digits" in which the purchasing power is preserved without serious currency devaluation.
As indicated in the above we are essentially dealing with non-cash transactions. Cash itself may be phased out altogether, and other forms of anonymous transaction could be created.
There are many aspects to do with electronic inflation controls which we will not deal with here. Yet, the key points have been made, and what has been said is open to further research, and development by economists, and computer experts.
Apart from what has been said above radical monetary reformers tend to concentrate on banks. As mentioned earlier these commercial enterprises create most of the money of the world out of thin air as a loan, or credit with interest ofcourse. Cash produced by governments only make a near non-existant portion of the present financial system. The aim of the monetary reformers in question is to try, and bring about interest-free money which would be beneficial to society, and the economy. Obviously, this is unlikely to happen because of the power of the banks.
In TFE this situation can be solved. Banks could continue to lend at interest but this would not be paid for by the customer but rather by an independent public body. However, when other highly profitable forms of business emerge then these can replace the creation of interest free credit, and only non-repayable money could be created at an "operational" cost. When, and how this would occur also depends on the readiness of humanity to accept a new understanding of money.
SOME IMPORTANT IMPLICATIONS OF TRANSFINANCIAL ECONOMICS.
These can be briefly listed:-
1. There would be a huge a process of acceleration towards the research, and possible use of sustainable technologies backed up by interest free loans, and ofcourse grants created out of new non-repayable money.
2. Transnational Corporations especially in the Third World could be transformed into truly ethical, and sustainable businesses with powerful financial incentives for change including profit subsidization on a massive scale.
3. Universal healthcare would be possible irrespective of whether private businesses are involved or not.
4. Genorous pensions would be had by everyone who needed them.
5. NGOs concerned with poverty reduction in the Developed, and Developing World would be better financed as never before to bring about positive change.
6. Corporations concerned with oil production, and indeed, the arms trade could be bought up in stages by new non-repayable money. At present democratic governments seem powerless to do much about them but with TFE we have a very powerful solution..................
Ofcourse, there are other implications which we shall not go into here.
A Final Note to this Entry.
It should be said that a paper on TFE with direct references was actually accepted by a peer review 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.
R.Searle.