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The Role of Money for a Healthy
Economy
Felix Fuders
1 Key Messages
1. All but one of the SDGs are directly linked to our current financial system which—
being completely unnatural—can be seen as the most important but at the same
time least recognized reason for market failure.
2. Only if we change the unnatural design of our money to a more natural one as
proposed 100 years ago by Silvio Gesell, we will be able to create a healthier
economy and reach the goals.
3. Such a reform of our financial system will also reduce the possibility of the
occurrence of major financial crisis and, furthermore, could be an alternative
way to address the imminent economic crisis that threatens world economy as a
result of the COVID-19 quarantine measures.
2 Background: The World Is on a Collision Course
If we take a look at any newspaper in any country, two major problems frequently
are addressed: inequality and the increasing destruction of the natural environment,
that is unsustainability in the stricto sensu. In 2015, more than 190 world leaders
recognized that the world is on a “collision course” (Max-Neef 2010) and committed
to 17 Sustainable Development Goals (SDGs). All but one goal are either linked to
the unsustainability of our current lifestyle (goals 9, 11–15) or to inequality (goals
1–8, 10, 16). Many conferences and high-level meetings have been held since then
F. Fuders (B
)
Right Livelihood College—Campus Austral and Economic Policy Chapter of the
Transdisciplinary Research Center for Socio Ecological Strategies for Forest Conservation
(TESES), Universidad Austral de Chile, Economics Institute, Valdivia, Chile
e-mail: felix.fuders@uach.cl
© Zhejiang University Press 2021
F. W. Gatzweiler, Urban Health and Wellbeing Programme,
Urban Health and Wellbeing,
https://doi.org/10.1007/978-981-33-6036-5_4
17
18 F. Fuders
and one of the major topics is how to finance these goals. However, it is not only more
money that is required but a different kind of money. In fact, both the overexploitation
of the natural environment and the income inequality are directly connected to our
unnatural financial system, and especially a misunderstanding of what money is and
what it should be.
3 Insights and Findings
3.1 Money Is Like the Blood of the Economy
Unlike real goods, money is easily storable and does, therefore, not easily circulate
in the economy. However, this is what it is supposed to do. Money can be described
as the blood of our economy. Blood needs to circulate, otherwise the body gets
ill. Similar to the blood circulation in the human body also the economy gets ill
if money does not circulate well. Money as a calculation unit is supposed to be a
medium to facilitate the exchange of goods and services. But, because people tend
to preserve what Keynes (1936: 165 ff., 194 ff.) called the “preference for liquidity”
we like to save up money, the more the better. With real goods, hoarding would
only be possible in a very restrictive way, since real goods perish. Any excessive
hoarding would, in time, result in the loss of the hoarded goods. But our money, as it
is designed today, makes it possible to hoard any surplus almost without restriction.
The unnatural design of our current financial system makes possible the hoarding of
values produced, which provides a strong incentive to produce more than is actually
needed.
3.2 Our Monetary System Obligates to Grow
The design of our money does not only give a powerful incentive to produce more
than is actually needed; it even obligates to do so and here, again, the driver is the
unnatural storability of money (for similar argumentation see Kennedy 2011; Creutz
2018). Money stored under the pillow does not circulate and, therefore, cannot serve
the economy. This puts the owner of money in a monopolistic-like position to either
choke the economy or to blackmail the person in need of money and “press” interest
(Gesell 1949: 205, 344). To put it in the words of Keynes (1936: 167), interest is
a“reward for parting with liquidity”, the incentive to lend the money out (or to
bring it to the bank which then lends it out for us). To come back to the above-used
metaphor of money as the “blood of the economy”, interest can be seen as the “drug”
that makes money circulate in the economy. And as any drug that is applied for a
prolonged period of time, also the money interest rate brings along heavy side effects,
especially the obligation to grow and inequality.
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22 F. Fuders
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