If we decide to make the course of the new currency dynamic to gold, such currency won’t be constrained by “golden weights” – it will be a normal modern currency.
Gold can assist to run this currency into circulation. Upon conditions of understated gold the game against such currency is doomed to failure. That game will mean further reduction in the cost of gold, that will cause the gold of these players being redeemed, and they will eventually come out of the game. Emission center of the new currency should be ready to rise the price of gold in order to issue new currency in proportion to the expansion of its monetary zone and to protect it from the risk of being turned into only the means of hoarding. For example, at the transition of Saudi Arabia in its oil trade to the new currency an additional issue of the new currency is performed. Export of inflation is completely eliminated from the goals of the new currency. Such a currency can be called altruistic, unlike all the other ones which exist today.
Export of inflation means the aspiration of the emission center to make profit – a percentage from issued money outside the national economy. The emission center of an altruistic currency has got other goal – not only to be effective finance, but also to stop the party of the warmongers.
Differences altruistic currency from an interest-free currency are 1) А change of interest is not planned in the future. All economic regulation is carried out through the fiscal system (remember the monetary model as incompressible liquid), the reserve ratio and relative to gold. 2) The aim of treatment is displacement interest money (interest of CB). 3) In order to implement this it is not mandatory uniform emission center. Enough for national currencies become altruistic.
State altruism – this is normal, when, for example, a state is building public roads, schools and hospitals. Commercial banks are not proposed to be abolished. Liquidated only a percentage of the issue – the refinancing rate of the Central Bank. Gold does not have to be a component of altruistic currency. It was seen as an additional lever creation of a supranational currency, by analogy with petrodollars.
In the original description of the financial system in the form of an incompressible fluid there is a simplification. The fact is that every time a commercial bank issues a loan and it doesn’t converted into cash, credit issuance of money takes place. Thus, the commercial banking system acts as a pump independent from Central Bank. This simplification doesn’t affect the further course of reasoning. I’ll add right here that 17% per annum stop the activity of this independent pump. There are few businesses with a yield above 17% +% of the commercial bank. It’s much more effective to prohibit those businesses that were planned to be stopped using high percentage, for example, like drug trade is prohibited, or to introduce temporal restrictions if a permanent ban is impossible.
Altruistic currency vs Fiat money – comparison of the ideologies
In my opinion, there is an unavoidable contradiction in the ideology of fiat money. Fiat money refers to the illegality of the monetary emission, and at the same time it recognizes the need for emissions in the amount of economic growth. In the ideology of an altruistic currency there is no semantic contradiction of this kind. Monetary emission is required at the time of the launch of the currency. Then it’s enough to reduce the reserve ratio proportionally to the growth of economy (risk reduction), and to perform direct printing of money when issuing cash loans if the reserves are insufficient. And, most importantly, the ideology of fiat money says nothing about the need to destroy % of CB.
Altruistic currency vs. Bitcoin
Emission of the altruistic currency takes place in favor of the economic growth – when issuing the loans. Issue of Bitcoins takes place exclusively for the benefit of the owners of this process.