Money - The New Rules of the Game (eBook)

Christian Felber is an internationally renowned speaker, lecturer at the Vienna University of Economics and Business and a contemporary dancer. Christian has authored several bestsellers: „50 Suggestions for a fairer World“, „New Values for the Economy“, „Let’s save the Euro!“, „Change everything. Creating an Economy for the Common Good“,  and „Money. The new rules of the game“, which was awarded the getAbstract International Book Award 2014. Christian is a regular collaborator of the Huffington Post. He is the initiator of the „Economy for the Common Good“ and the project „Bank for the Common Good“. Felber was born in 1972, studied Spanish, Psychology, Sociology and Political Sciences in Madrid and Vienna, where he lives and works as an independent writer.

Preface: Money and democracy – an Overdue Wedding 9
References 11
Acknowledgements 13
Contents 15
1 Introduction: A Coercitive and Intransparent Financial System 20
1.1 The Non-Holistic Evolution of the Monetary System 20
1.2 The Multi-Dysfunctionality of Our Current Monetary System 23
1.3 Regulators Wanted 26
References 26
I. The Process towards a New Monetary Order 28
2 Tamer Wanted: Who Will Restrain the Global Monetary and Finance System? 29
2.1 G20 and the Financial Stability Board (FSB) 29
2.2 International Monetary Fund (IMF) 31
2.3 World Trade Organization (WTO) 32
2.4 Basel Committee on Banking Supervision 33
2.5 European Union 34
2.6 United Nations (UNO) 36
2.7 Independent Experts 36
2.7.1 Who then? 37
References 37
3 Rewriting the Rules of the Game: The Democratic Monetary Convention 39
3.1 Legitimation and Contextualization of the Convention 40
3.2 From Municipal to National Economic Convention 41
3.3 From Local to EU to Global Level 41
3.4 Local Matters 42
3.5 Core Subject Matters 42
3.6 Decision-Making Procedure 43
3.7 Utilization of Results 45
3.8 Initiated Prototypes 45
3.9 Ten Reasons for a Monetary Convention 46
Reference 46
4 The Basis: Money as a Public Good 47
4.1 Extended Meaning of “Public Good” 48
4.2 Values of the Monetary System 51
References 51
II. The Content – Cornerstones of a Democratic Monetary System 52
5 Who Creates Money? 53
5.1 The National Central Bank 54
5.2 Commercial Banks 54
5.3 Companies 55
5.4 Private Individuals 55
5.5 Political Regional Authorities 55
References 56
6 Sovereign Money Reform 57
6.1 Creation of Bank Money by Private Commercial Banks 57
6.2 Sovereign Money Reform 61
6.3 Benefits of the Reform 63
6.4 Side Note: Sovereign Money and Hundred-Percent Money 66
6.5 Amendment of Legislative Texts 67
References 68
7 Democratic Central Banks 69
7.1 Who Does the Central Bank Belong to? 70
7.2 Democratic Organization of the Central Bank 72
7.3 Objectives and Tasks of a Central Bank 73
7.3.1 The ECB Model 74
7.3.2 The Fed Model 75
7.3.3 The Alternative Model 76
7.4 Monetary Authority 79
References 80
8 Solving the Problem of Sovereign Debt 81
8.1 Proposal for the Reform of Sovereign Debt Financing 82
8.2 Benefits of the Reform for the Public 85
References 86
9 Bank Lending Regulations 87
9.1 Loans for What and for What Not? 90
9.1.1 Ethical Creditworthiness Appraisal 90
9.1.2 Speculative Financial Credit? 92
9.1.3 Regional Priority 95
References 97
10 Common Good Oriented Banks 99
10.1 Banks Are Historically Common-Good Oriented 99
10.2 Criticism of Bank Bailouts and the EU Banking Union 102
10.3 State Support Only for Common Good Banks 105
10.4 Common Good Orientation of Banks 106
10.5 Prototypes Everywhere 110
10.6 Systemic Consideration: From the Investment Bank to the Depository Bank 111
10.7 Adieu, Return on Investment 113
10.8 From the Risk Premium/Capital Tax to a Meaningful Return on Investment 115
10.8.1 A Hoarding Ban for Cash Millions 116
References 116
11 EU and Global Financial Supervision 118
11.1 EU Financial Supervision with an Edge 120
11.1.1 Splitting up System Relevant Banks 120
11.1.2 Closing or Strict Regulation of Shadow Banking Activities 121
11.1.3 Market Admission Approval for New Financial Products 123
11.1.4 Stricter Equity Capital Requirements 125
11.1.5 Rules for Funds and Capital Investment Companies 128
11.2 Global Financial Supervision 130
References 132
12 Derivatives—Close the Casino 134
12.1 General Regulation Proposals 138
12.2 Shares—Regional Common Good Exchanges 139
12.2.1 Regional Common Good Exchanges and the “Triple Skyline” 139
12.3 Close Securities Markets 142
12.4 Government Bonds—The Use of the Central Bank 143
12.5 Foreign Exchange—A New Global Currency System 144
12.6 Commodity Markets—Global Commodity Agreement 144
References 149
13 Secure Pensions 150
13.1 The PAYG Pension is Easily Financed 151
13.2 What Makes Private Provision Better? 155
13.2.1 Are Private Pensions Less Vulnerable with Regard to Demographic Factors? 156
13.2.2 Are the Premiums in Private Pensions Paid More Interest than Social Security Contributions? 157
13.2.3 Are Private Schemes Cheaper? 158
13.2.4 Is the Private Pension System Distributively Fairer? 158
13.2.5 The Methuselah Conspiracy 159
13.2.6 Do Favorable Framework Conditions for the Private Pension System Also have a Favorable Impact on the PYAG Pension System? 159
13.3 Alternatives 161
References 161
14 Global Tax Cooperation 162
14.1 Systemic Tax Evasion 162
14.2 Step 1: Automatic Registration of All Domestic Income 166
14.3 Step 2: Multilateral Agreement on Information Exchange 167
14.4 Trust and Cooperation 168
14.5 From the previous EU Interest Directive to the Sound Capital Income Directive 169
14.6 World Financial Registry 170
14.7 Technical Implementation 170
14.8 Globally Just Corporation Tax—“Entire Group Taxation” 171
14.8.1 Country of Residence Principle 173
14.8.2 Unitary Taxation or Overall Group Tax 173
14.9 A Go-It-Alone by the EU is Possible! 175
References 175
15 Income and Ownership Caps—“Negative Feedback” 176
15.1 Excessive Inequality 176
15.1.1 Liberal Argument 178
15.1.2 System Theoretical Argument 180
15.1.3 Performance Justice and Equal Opportunities 181
15.1.4 The Financial Stability Argument 182
15.1.5 The Health Argument 182
15.1.6 The Happiness Argument 183
15.2 Limiting Income Inequality 184
15.3 Capping of Private Property 185
15.4 Inheritance 187
References 189
16 Currencies—Time for a Bretton Woods II 190
16.1 Failure of Bretton Woods I 190
16.2 Shortcomings of the Current Monetary Order 193
16.3 Pledge for a Bretton Woods II 195
16.4 Global Monetary Cooperation 197
16.5 Adjustment of Exchange Rates according to Purchasing Power Parity 197
16.6 Epilogues 199
16.6.1 Planned Economy in Peking und Zürich 199
16.6.2 End of the Dollar Hegemony? 200
16.6.3 Local and regional complementary currencies 201
References 202
III. Kick Off 203
17 The Path to the first Convention 204
17.1 Bottom-Up-Strategy 205
17.2 The Process of a Democratic Monetary Convention 206
17.2.1 Who Initiates a Convention? 207
17.2.2 Who is in the Convention? 207
17.2.3 How is the Convention Implemented? 207
17.2.4 How does communication and decision making take place? 208
17.3 Evolution of Contents 210
17.4 International Cooperation 211
17.5 From Monetary Convention to Constitutional Convention 211
References 212
18 Questionnaire for the Monetary Convention 213
18.1 Creation of Money 213
18.2 Sovereign Money Reform 214
18.3 Central Bank 214
18.4 Sovereign Debt 215
18.5 Banking System 215
18.6 Commercial Banks 216
18.7 Financial Supervision 217
18.8 Derivatives 218
18.9 Pensions 220
18.10 Tax Justice 221
18.11 Restriction of Inequality 223
18.12 International Monetary Order 225
Index 227