The English version of THE MONEY SYNDROME is now available in the United Kingdom on a books-on-demand basis. It can be ordered from Fast-Print Publishing ISBN: 9781844268573
The majority of literature dealing with problems in the economy or associated fields, such as society and the environment, concentrates mainly on decisions made in economic, financial or political institutions and organizations and offers solutions on these planes. Little attention, however, is paid to money itself, which is usually taken for granted and only appreciated as a useful tool in everyday life. After all, what should be wrong with it? And yet, looking closely at various phenomena, at processes that don’t develop as they are supposed to, it is almost always possible to find the root cause in a tiny flaw in the structure of this otherwise handy tool. The conflict arises from the contradiction between money as a medium of exchange and as a means for saving value. It cannot fulfill both functions at the same time. Getting storable money back into circulation, demands interest and compound interest.
For the first time THE MONEY SYNDROME offers a close analysis, giving meticulous evidence of the varying and extensive consequences that derive from this tiny flaw. The author investigates the dysfunctional effects of money, using the example of Germany’s economy since World War II. He shows how, in the beginning, interest helps to accumulate the new capital necessary for developing a collapsed economy. Going on to present how, as the economy grows and capital accumulates, interest charges claim an increasing share of the national product. In Germany, monetary assets have doubled roughly every eight to nine years, which amounts to an exponential increase. Since no economy can grow exponentially in the long run, the collapse of the whole system can be anticipated.
A variety of dysfunctional effects in different fields have accompanied the growing discrepancy between the financial economy and the real economy. At first glance, it is difficult to see a common link between such varied phenomena as environmental degradation and unemployment. A link can, however, be detected in the accelerating demands of capital that call for increasing profits by recklessly exploiting natural resources and the Third World, while at the same time cutting personnel costs in the production area. By looking closely at various phenomena, it can clearly be seen that the existing monetary order is a system doomed to strangle itself.
The basic problem was discovered and fully described by a man named Silvio Gesell about a hundred years ago. Renowned scientists such as John Maynard Keynes and Irving Fisher not only acknowledged his findings, but endorsed his proposals for a solution. Since Keynes’ suggestion for a global reference currency “Bancor” was turned down at Bretton Woods, no significant change has occurred in the world’s monetary system, with the EURO for example representing no fundamental change either. THE MONEY SYNDROME invites the reader to take a new look at the works of Gesell and Keynes by offering solid and full ranging evidence for the dysfunctional effects of the world’s monetary system.
Coverage and Organization
The author, who has had more than thirty years professional experience in financing, economic calculations and viability testing, carried out his investigations for about twelve years before the first edition of THE MONEY SYNDROME was published. Through careful study and research he wanted to provide material that would withstand close scrutiny and present it in a way that would be comprehensible for anyone. He lucidly explains the economic terms and functions that surround money and shows his factual findings in numerous diagrams and graphs, using the example of Germany’s economy since World War II. He then shows the various effects of our monetary system on a vast range of fields including agriculture, social instability, the degradation of the environment, the over-indebtedness of the Third World and a trend toward triggering wars.
Since mainstream economics still maintains a taboo on money as a topic, THE MONEY SYNDROME is designed to be a popular non-fiction book mainly aimed at a discriminating general audience.
The majority of literature about money deals with topics concerning the infrastructure of money, i.e. banks, funds, and organizations like the IMF or WTO. There is practically no literature that deals with the circulation medium itself, its structure and the resulting implications. There is a growing number of books, however, that deal with alternative economies such as local exchange trading systems, barter rings and the like. Since the issuance of private money would clash with the legislation in most countries, these resort to alternative ways of banking, i.e. accounting.
THE MONEY SYNDROME is therefore unique among books on economic topics. There are three titles that it could be compared with:
- Margrit Kennedy, Interest and Inflation Free Money. This book which was largely inspired by Helmut Creutz’ work, can be seen as a more popular summary of THE MONEY SYNDROME. The fact that this book has been translated into eighteen languages up to now may indicate a growing worldwide interest in the topic.
- Gero Jenner, Das Ende des Kapitalismus. Triumph oder Kollaps eines Wirtschaftssystems?, Frankfurt/M. 1999, Fischer Taschenbuch Verlag (Link in German only: The End of Capitalism. Triumph or Collapse of an Economic System?) While relying on data from Helmut Creutz’ book as a standard work of reference, the author lays emphasis on international scale industrial and sociological effects.
- Bernard Lietaer, The Future of Money, 2001, Random House. Impressed by a rapid worldwide increase of alternative models of economy, such as local exchange trading and barter systems, he probes deeply into the psychological and sociological implications of money. As a former manager of the Belgian National Bank Lietaer also promotes an innovative global reference currency similar to Keynes’ proposal of “Bancor”.
- Jürgen Kremer, Dynamic Analysis — Investigating the Long-Term Behaviour of Economies, PDF, 381 KB.
Dr. Jürgen Kremer is professor of economics at the Rhein-Ahr-Campus with emphasis on economic mathematics. He has drawn this conclusion from the Dynamic Analysis:
“Assuming that the models presented here are so comprehensive that the results of dynamic analysis can be applied to real economies, then we can draw the following conclusion: the payment of interest on capital over the long term only lacks destabilising economic eﬀects if the economy grows constantly and unlimited in time, i.e. exponentially. In view of the ﬁniteness of the earth’s resources, constant economic growth is neither desirable nor possible. An economic order which wishes to remain stable over time must therefore reject the concept of paying interest on wealth.
There may be a need for improvement in our economies. But if the model proposed in this article does reﬂect essential features of reality, then no economic reform can be successful unless the problems caused by the payment of interest on wealth in the ﬁrst place are recognised and solved.”
There seems to be a growing interest in the work of Gesell and Keynes on the part of national bankers as the following working papers imply:
- Nikolaos Panigirtzoglou, Willem H Buiter, Liquidity traps: how to avoid them and how to escape them. Download from the Bank of England, PDF-file, 296 KB
- Mitsuhiro Fukao, The Effects of ‘Gesell’ (Currency) Taxes in Promoting Japan’s Economic Recovery. External download: PDF, 365 KB
- Willem H Buiter, “Overcoming the Zero Bound: Gesell vs. Eisler; Discussion of Mitsuhiro Fukao’s “The Effects of ‘Gesell’ (Currency) Taxes in Promoting Japan’s Economic Recovery“. External download: PDF, 169 KB
- Marvin Goodfriend, Overcoming the Zero Bound on Interest Rate Policy. Marvin Goodfriend is Senior Vice President and Policy Advisor at the Federal Reserve Bank, Richmond, USA. External download WP 00-03/PDF-file, 831 KB
- Evan F Koenig, Jim Dolmas, Monetary Policy in a Zero-Interest-Rate Economy. Download from the Federal Reserve Bank, Dallas: PDF, 138 KB
And a few blog entries:
- Bruce Champ, Stamp Scrip: Money People Paid to Use. The author is Senior Research Economist at the Federal Reserve Bank of Cleveland.
- Greg Mankiw, Reloading the Weapons of Monetary Policy. The author is professor of economics at Harvard University.
- J. Bradford De Long, Grasping Reality with Both Hands: Silvio Gesell and Stamped Money. Department of Economics, U.C. Berkeley
- Willem Buiter, Professor of European Political Economy, London School of Economics and Political Science
The Wonderful World of Negative Nominal Interest Rates, Again
Irving Fisher as well as contemporary economists seem to consider the “Gesell tax” only as an additional policy instrument and transitory measure in the case of looming liquidity traps which, according to A Greenspan, probably occur only once in a century.
For money reformers, however, the “Gesell tax” is not just piecemeal but understood as a permanent prerequisite for a stable and sustainable economy!