Transfinancial Economics

Transfinancial Economics is a concept for economic and financial reform developed by Robert Searle.

URL = http://kheper.net/essays/Transfinancial_Economics.html

"This is a brief non-technical introduction to a "new" futuristic monetary reform. It is called Transfinancial Economics (TFE), or Non-Taxation Monetary Reform. It revolves around the concept that new non-repayable unearned money can be responsibly created without raising taxes, or even fundraising 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.

At the present time radical monetary reform is concerned with the power of banks. These private commercial companies create virtually all of the money of the world as loans, or credit. Governments issue the rest as coins and paper. The banks though produce it "out of thin air" by simply adding figures of higher monetary value onto paper and computers. Strictly speaking, there is meant to be a limit on how much they can create and this is based on "money" kept in reserve. This whole set-up is called fractional reserve banking. The banks Of course make huge super-normal profits on their loans for commercial, governmental and private use (eg. mortgages).

Some critics of fractional reserve banking have stated that it is a fraud in that it counterfeits the national currency. More seriously, it produces non-existent "funny money!" Since virtually all of the money in the world is created by banks it is believed that changes in the interest rates of their loans may well be the real cause of inflation. When the economy is not doing well the interest rate on borrowing notably for businesses is reduced to encourage a high take up. This in turn means expansion of commercial enterprises and increased employment leading to a general material prosperity. As more and more money is allowed to circulate it has to be somehow reduced to avoid serious degrees of inflation. This is done by raising interest rates on loans so that they discourage commercial take up. This results in less business expansion, decreased employment and a certain amount of economic depresson. The whole cycle is then repeated.

Anyhow, the aim of monetary reform itself here is to have loans created without interest. This could put a complete end to the business cycle of "boom", or "bust" just described. Interest free loans would be highly beneficial for the economy, society and politics.It would also mean that the banking system itself would no longer be a massive commercial enterprise. Instead, an independent public authority would issue interest-free credit.

The big problem here of course is that the banks are very powerful indeed. They would take immediate legal action against any country if they felt that their huge monopoly was being threatened. The only way then to successfully undermine their huge power is to use Simultaneous Policy. This is the modernization and popularisation of an old concept. In it people can at election time vote for those candidates who are willing to accept their policy proposal. The aim here ideally is to get most countries to try and implement it simultaneously. Such an approach could be used against banks who would have little, or no choice but to comply to their own demise as private commercial companies and hence, make way for independent public authorities which would lead to an interest free and indeed, a tax free economy.

This brings us to another point. Non-Taxation Monetary Reform is far more important that Interest-Free Monetary Reform as its social, economic and political benefits are totally outstanding. The latter should be united with the former if it is to be truly successful, or have any real impact on the public. As such Interest-Free Monetary Reform is seen as being of secondary importance compared with Non-Taxation Monetary Reform. Thus, both proposals make up

Transfinancial Economics, or TFE.

Transfinancial Economics,or TFE is essentially a modernization of an old concept. Communities past and present have existed with little, or no taxation. Nowadays, there is a growing interest in so-called complimentary currencies which are simply made up money accepted by a small number of people as a medium of exchange. LETS, or Local Exchage Trading Systems is a classic example in which "funds" when borrowed are interest free.Apparently though, it would still be subject to taxation. Such a method as LETS is laudable and yet, it is at the same time very limited compared with a proposed legal nationwide currency which is both tax and interest free (when borrowed). However, there are some ideas which are similiar in some way to TFE. Social Credit is one such concept. It is very briefly discussed here.

Social Credit which was founded back in the early 20th Century by Clifford Douglas believed in new money, or rather what it termed debt-free money. It claims that if sufficient amounts of it were created there would be no serious inflation. Among other things it believed in a National Dividend which is almost identical to the concept of the Universal Basic Income mentioned earlier. The key point to understand about Social Credit is that its debt-free money does not appear to replace taxation and is thus limited. More importantly, no sane modern day democratic government in the world would create new money unless there were credible safeguards against hyper-inflation. Super-computers carefully programmed could easily do this. A book with the misleading title of Public Finance Without Taxation by Ronald Burgess exists. It deals with Henry Georges economic reform. This involves the notion that a rent, or rather more accurately, a property tax on land could be levied to fund governmental programmes. In other words, it does involve a form of taxation which contradicts the title of the aforementioned book!

Interestingly, an advanced socialist system has been suggested in which everything is run by co-operatives. Since all the wealth would be fairly re-distributed there would be no need for any taxation. However, in genuine utopoian socialism there is no money. Instead all necessary activities are done out of "loving" service to the community.

Abba Lerner the founder of Functional Finance appears to have believed that savings could lead to a situation of lower taxes, or indeed, zero taxation. John DeSantis, in Baltimore USA had a vision of economic reform in which taxes would not exist. His ideas appear on a website, but as he himself admits they require radical improvement by other people. Also, an engineer called Theodore Thoren used mathematics to claim that zero taxation was possible.

In times of emergency and revolution governments have been forced to partly, or even fully finance their expenses via the printing of new money. Examples include the American War of Indepedance, the French Revolution, the American Civil War and the Russian Revolution. There is a claim circulating that Benjamin Franklin spoke of Colonial Scrip which was a successful monetary currency that was actually free from taxation and acted as the national medium of exchange. It could also be borrowed without interest. This financial arrangement occured just before the American War of Independence (just mentioned) but research has yet to admitedly confirm these claims.

Transfinancial Economics (ie.TFE), or Non-Taxation Monetary Reform does not pretend to be the ultimate panacea of all the ills of the world. But, it does claim to be a major force for change and as such must be taken seriously.

Internet Resources

The subject of Non-Taxation Monetary Reform, or Transfinancial Economics is a rare and virtually unexplored area of human endeavour. However, there are at least three key internet resources that deals with it in some way.

They are:-

i) www.TIEA.us.

This is run by a prolific elderly emailer John Gelles who has been a lawyer, accountant, teacher and systems analyst. He has some reservation concerning my concept on electronic super-flexible pricing as being acceptable to business. However, there is a very powerful and indeed, highly lucrative means for encouraging compliance over inflation. This is the non-repayable Business Incentive Grant, or BIG which would be created out of new money and lead to greater economic growth.This idea is not mentioned in the article/paper. Gelles is also an avid follower of the economist Abba Lerner.

ii) www.Xat.org.

This is a LETS group which believes in non-taxation, and notably direct democracy. This site in 2004 hosted my two research and development projects of Transfinancial Economics and Multi-Dimensional Science. Due to a rift it no longer does.

iii) www.publicandprivateenterprise.org.

This is the site of John DeSantis but displays little grasp, or knowledge of real world economics. However, he has to be praised for his courage in trying to get people to discuss world change and the need for non-taxation. Also, one other website resource is included here which deals with global justice in general but well worth a visit.

iv) www.globaljusticemovement.net.

This is run by Peter Challen and Rodney Shakespeare who wrote the book The Seven Steps to Justice. Its Discussion Group received the highest record number of emails in August 2004 when I first introduced my concepts on Transfinancial Economics."

All the above is sourced by Robert Searle at http://kheper.net/essays/Transfinancial_Economics.html