Andrey, what can you tell us about Johan Gesell’s money? Johan Silvio Gesell and his theory of money How the US Federal Reserve makes money out of nothing - out of thin air.

05.03.2024

Preface from the author : Having fully familiarized yourself with the material provided, the entire order of the financial and political system in which we are in control will clearly open for you. You will see what money is, what monetary systems there are other than the one we are used to today. You will learn about the causes of poverty and who, after all, benefits from maintaining this state of affairs!
Here is information that the “rulers of the world” are hiding from us in every possible way!
Forewarned - Forearmed!

“Everyone, to the extent of his understanding, works for himself, and to the extent of misunderstanding, for the one who knows and understands more...!”

K.P. Petrov

“The best slave is a slave who considers himself free...”

What is Free Money?

Free Money (Freigeld) by Silvio Gesell

Gesel experiment (free money) in Russia

In his scientific works, Gesel draws a distinction between the rate of interest and the marginal efficiency of capital and argues that it is the rate of interest that sets the limit to the growth rate of real capital. In addition, he notes that the rate of interest is a purely monetary phenomenon and that the specific feature of money, from which the meaning of interest on money follows, is that the possession of money as a means of accumulating wealth involves its holder in negligible storage costs, and such forms wealth, such as stocks of goods, the storage of which is associated with costs, actually brings income only because this is the “order” established by money.

Alchemy of money

The idea of “free money” (Freigeld) is based on the idea that good money should be “an instrument of exchange and nothing else.” According to Gesell, traditional forms of money are extremely ineffective, since they “disappear from circulation whenever there is an increased need for them, and flood the market at moments when their quantity is already excessive.” Such forms of money “can serve only as an instrument of fraud and usury and should not be recognized as usable, no matter how attractive their physical qualities may seem.”

Key Ideas

Silvio Gesell was a supporter of the nationalization of land and the abolition of interest on loans.

Gesell believed that the “natural economic order” that ensures the circulation of money is an order in which money becomes a paid government service, the so-called “negative interest money”, when the current owners of money are obliged to regularly transfer a certain small amount to the state as payment for the right use government issued money.

The first practical application of Gesell's views was an experiment in 1932 in the Austrian town of Wörgl with a population of 3,000 people. As a result of the experiment, a bridge was built in the city, the condition of roads was improved, and investment in public services increased. It was at this time, when many European countries were forced to struggle with rising unemployment, that the unemployment rate in Wörgl fell by 25% in a year. When more than 300 communities in Austria became interested in this model, the Austrian National Bank saw this as a threat to its monopoly and banned the printing of free local money. Despite the fact that the dispute lasted a very long time and was considered even in the highest courts of Austria, neither Wörgl nor other European communities managed to repeat this experiment.

History of the dollar and the Fed, the origins of the crisis

Now the most powerful free money system is the Swiss WIR (German: Wirtschaftsring-Genossenschaft, Economic Circle Cooperative), which has 62 thousand participants and provides an annual turnover of the equivalent of 1 billion 650 million Swiss francs. This system was founded in 1934 as a mechanism to overcome the payment crisis that developed under the influence of the Great Depression. However, already in 1952 they were forced to abandon Gesel’s theory of “free money” and now use interest rates.

A logical continuation of Gesell’s ideas are the various versions of “local exchange trading systems” (LETS) that exist today in both the United States and Europe.

Since there are many alternative systems to fiat and credit money, which means theoretically there is a reason to avoid disaster, everyone is wondering how this disaster can be averted - peacefully or violently. Romantic environmentalists like Margrit Kennedy, whose book Money Without Interest and Inflation became the bible of Silvio Gesell's free money theorists in Russia, advocate a peaceful transition and patiently convincing the financial elite of the need to voluntarily abandon the main trough - credit money. It is difficult not only to agree, but even to imagine the measure of botanical idealism required to cultivate faith in the very possibility of such a development of events.

A violent resolution of the situation seems equally unrealistic, because the apparatus of suppression, equipped with modern technologies and in the service of “old money,” is so superior to the chances of any opposition that it excludes even a hint of a meaningful armed confrontation. Not to mention the fact that an effective system of total brainwashing through the media will never allow the emergence of “wrong thoughts” in quantities sufficient for mass confrontation.

Thus, like it or not, the most likely development of events is represented in the image of a pecking roast rooster - that same financial disaster that, it seems, cannot be avoided. In such circumstances, it is tempting to assume that the story of alternative monetary systems is nothing more than idle knowledge, devoid of practical implications.

The originality of the topic, however, lies in the fact that all free money models were initially created not as an alternative to the global financial system, but as a local initiative that could make life easier for a small community, town, city, or at most a region or county. There is even a synonym for Silvio Gesell's varieties of Freigeld - community currencies, local currencies. The idea of completely replacing national currencies with free money arose much later - during the period of the final departure of monetary fantasy from the reality of goods and services (in the early 80s of the last century).

It is in the local aspect of free money, the possibility of using it in the most limited area of the market space, that we see the practical interest of the topic for readers of the Business Journal. At least for the most inquisitive part of them. After all, the Freigeld implementation schemes are so elementary, and the effectiveness of their application is so obvious that it would be a sin to resist and not try!

gold reserve

Mechanics of crisis - part 1

Mechanics of crisis - part 2

Concept by Silvio Gesell. At the heart of Freigeld's theory is the idea that good money should be "an instrument of exchange and nothing more." According to Gesell, traditional forms of money are extremely ineffective, since they “disappear from circulation whenever there is an increased need for them, and flood the market at moments when their quantity is already excessive.” Such forms of money “can serve only as an instrument of fraud and usury and should not be recognized as usable, no matter how attractive their physical qualities may seem.” Silvio Gesell wrote these words in an era when the gold standard was still the generally accepted condition for the issue of paper money. The subsequent refusal of any security deprived money of its last - physical - attractiveness.

If Gesell had stopped at criticizing the imperfections of monetary systems, his name would have long ago disappeared into the sands of history. Moreover, Gesell's critical analysis is not even close to the monumental vivisection performed by Karl Marx on capitalism. Gesell’s genius lies elsewhere: in his conclusions and - most importantly! - practical recommendations.

For Marx, “evil” is in surplus value, and the restoration of justice involves the withdrawal of this value from one class in favor of another. For Gesell, “evil” is in the credit nature of money, and the restoration of justice presupposes the elimination of this credit nature. Just think about the difference: instead of violence against people, there is violence against an abstraction!

The Great American Show (How We Are Managed)

Modern money, designed by definition to facilitate the exchange of ordinary goods, has, unlike these same goods, a unique ability: it can multiply itself without effort on the part of its owner. A peasant who delivers fruit to the market is vulnerable to the time factor: if the goods are not quickly sold, they will either fall in price or spoil. Money in the buyer's pocket has no such disadvantages. In addition, money can be kept not in your pocket, but in a bank, where it will grow. Apples, tomatoes, a personal computer, and a car rot, sour, depreciate and depreciate over time, but money retains the advantages of a non-perishable commodity.

Money in its modern form has become an ideal commodity, which determines its disinterest in servicing the market of traditional goods and services, from where it is withdrawn for self-satisfaction - be it in the form of time deposits, securities, bonds, options, futures, warrants, swaps and a host of derivatives.

It can be assumed that the difference between free money and traditional money is that they do not accrue interest. Where there! Silvio Gesell put forward a revolutionary idea for modern times: it is not enough to deprive money of the ability to generate profit through interest, it must be subject to interest! In other words, a fee must be charged for the use of money: “Only money that becomes obsolete like newspapers, rots like potatoes, rusts like iron and evaporates like ether can become a worthy instrument for the exchange of potatoes, newspapers, iron and ether. Because this is the only money that buyers and sellers will not choose over the product itself. And then we will begin to part with goods for money only because we need money as a means of exchange, and not because we expect advantages from possessing money itself.”

Moral foundations of economics. Efimov V.A.

It was not by chance that I made the reservation that the Freigeld concept is revolutionary for the new time. The biggest revelation of Silvio Gesell's free money is that not only the idea itself, but also the experience of its application in practice has a thousand-year history! I believe the reader will be interested to know that free money was used for a long time back in... Ancient Egypt! “Units of money with demurrage / One of the modern synonyms of Freigeld (along with “neutral”, “negative”, “free” money): “You can compare money with a railway carriage, which, like money, facilitates the exchange of goods. It goes without saying that the railroad company does not pay a premium (interest) to the user of the car for unloading it so that it can continue to be used; but the user pays a small “demurrage fee” if he has not ensured the unloading of the wagons. This is basically all we should do with money to eliminate the negative impact of interest. Each user pays a small “mooring fee” if he holds the money longer than necessary for exchange purposes.” (Margrit Kennedy, “Money Without Interest and Inflation”) / In Egypt, rough pieces of pottery called “ostraca” were used. (ostraka). In essence, these fragments were receipts for deposits made by farmers at local warehouses: the farmer handed over grain and received an “ostraca”.

And the information is absolutely sensational that various variations on the Freigeld theme served as the main form of money in Medieval Europe from the 10th to the 13th centuries!

“In the German lands these were “bracteaten”, thin silver plates that were taken out of circulation and replaced with new ones every year.” And also: “In 930 AD. e. The English king Athelstan established that every small city should have its own mint! In the context of this tradition of local lords, increasing revenue through the "Renovatio Monetae" (literally "Resumption of Coinage") was established throughout. For example, in 973 Edgar completely changed the coinage of the English penny. Almost six years later, the young king Ethelred II began minting a new coin. He has repeated this since then at approximately equal intervals. The main motivation was that the royal treasurers would only give three new coins for four old ones, which was equivalent to a tax of 25% every six years on any capital contained in the coins, or approximately 0.35% per month. Thus the new coinage was a crude form of payment for storage."

The priority of free money over credit, observed at the origins of European civilization, serves as further proof (in addition to the traditional Christian prohibition of usury) of our obsession: banking capitalism, which dominates the modern economy, is by no means an organic development of social relations, but only records a general defeat Tradition, inflicted on it by an alien moral and ethical system.

Masters of money - part 1

Masters of money - part 2

If the Great Depression hits the United States again, its consequences will be felt throughout the world. That's why economists are taking a closer look at Freigeld, an alternative to regular money. As we have already explained, the fundamental difference between free money and conventional credit is that free money not only does not earn interest, but, on the contrary, is subject to a tax for holding it. Initially, Silvio Gesell proposed four forms of implementation of the Freigeld principle (tabular free money, stamped, serial and additional), but later settled on the stamped form, which was put into practice in Austria, Switzerland, Germany and America.

It was the Freigeld stamp form called “brand certificates” that Irving Fisher described in his book. The main characteristics of free money: like regular money, it can be deposited, invested or spent, but cannot be multiplied. This is achieved as follows. Suppose the city authorities decide to issue free money, the value equivalent of which is established by agreement at the level of a thousand dollars. The purpose of the issue is to subsidize municipal construction for one year. Success requires the good will of at least two parties: the workers involved in construction, and the merchants from whom those workers purchase goods. The former must agree to accept free money as payment for labor, the latter - as payment for goods. Fisher rightly points out that there is no need to enter into an agreement with all trading organizations: a few are enough for the rest to voluntarily join in due to competition. Free money is issued for a period of one year, after which it can be exchanged for regular dollars. To ensure the exchange, municipal authorities at the time of expiration will need a thousand real dollars, which, in addition to a traditional bank loan, can be obtained from the issue itself, since the stamp model of free money allows the project to achieve self-sufficiency.

This is how the global credit and financial system works!

This is what it looks like. The front side of stamp certificates is usually similar to regular money. It indicates the value equivalent (for example, one dollar), the name of the issuer, the conditions and terms of exchange for regular money. On the reverse side there are 52 cells on which stamps must be affixed weekly. Let’s assume that by agreement the reference day of the week is Wednesday. This means that a stamp certificate can be in circulation with the old stamp on Thursday, Friday, Saturday, Sunday, Monday and Tuesday, and on the following Wednesday the last certificate holder is obliged to stick a new stamp. The two-cent stamp is sold by municipal authorities implementing a free money project.

Now it is clear where the money comes from to exchange free money for regular money at the time of expiration: at the end of the year, each stamp certificate will have 52 stamps attached, which the municipality sold for 1 dollar 4 cents. An issue of $1,000 thus brings in $1,040 in cash. 1,000 will go to cover the exchange, and 40 will go to cover the costs of administering the project.

However, the self-sufficiency of brand certificates is a minor matter. The main thing is that the weekly expiration of free money leads to an unprecedented turnover! Judge for yourself: every owner of a stamp certificate strives to get rid of it as soon as possible in order not to pay a tax in the form of a two-cent stamp next Wednesday. Ultimately, all free certificates on Tuesday evening are accumulated by retailers, wholesalers or manufacturers, who paste stamps - a kind of tax - with great pleasure: it is this energetic money that provides them with unprecedented trade turnover. According to Irving Fisher's calculations, the turnover of free money in hundreds of American cities during the Great Depression was at least 12 times (!) higher than the turnover of ordinary dollars! It is this property of free money that allows us to speak about its unique efficiency, which, as is known, is determined by the formula: “volume multiplied by circulation velocity.”

How the US Federal Reserve makes MONEY OUT OF NOTHING - OUT OF AIR

The danger to the status quo of the global financial elite hidden in the Freigeld concept is incomparably higher than from all possible variations on the theme of “Capital” by Karl Marx. The model of the functioning of free money, described by Irving Fisher, was literally implemented word for word in the very first attempts to apply Gesell’s concept on practice. First in Germany, the owner of the coal mine, Max Hebecker, revived from the ashes the Bavarian village of Schwanenkirchen, whose population (500 people) had been living from hand to mouth for the last two years on state unemployment benefits: “Already a few months after the resumption of the mine, Schwanenkirchen was unrecognizable - workers and owners merchants completely repaid all their debts, and a new spirit of freedom and life literally hovered over the city. News of the village's prosperity in the midst of the economic depression that struck Germany instantly spread throughout the area. Reporters from all over the country wrote about the “Schwanenkirchen miracle,” and even in the United States one could read about the experiment in the financial sections of all major newspapers.”

Money - a pyramid of debts

A year later, the German experience was triumphantly repeated by the mayor of the Austrian city of Wörgel, Michael Unterguggenberger. After the introduction into circulation of free money, created according to the type of stamp certificates /Stamps for free money of Wörgel were pasted once a month, and not weekly/, the city, whose tax debt in five years increased from 21 thousand shillings to 118 thousand, began to pay off already in the first month (Sh4,542). Over the next six months, the emission of “free shillings”, equivalent to 32 thousand ordinary shillings, provided public works worth 100 thousand shillings: 7 streets were paved, 12 roads were improved, sewerage was expanded into two new blocks, a new park was created, a bridge was built and new jobs for 50 unemployed.

On January 1, 1933, construction began on a new ski resort and reservoir for the fire service in Wörgel. A neighboring city with a population of 20 thousand residents hastily began preparing to issue its own free money. When 300 communities in the country became interested in Wörgel’s experience, the National Bank of Austria, sensing a threat to its monopoly, banned the printing of free local money.

After World War II, the development of the concept of free money went in two directions: local mutual lending systems (so-called LETS - Local Exchange Trading Systems), using either checks or electronic forms of offset instead of physical certificates, and time banking systems, allowing project participants to exchange your work on the so-called "time dollars". The last model is especially easy to implement: you spend your free time doing some kind of work for other project participants: walking dogs, babysitting someone else's child, cutting hair at a hairdresser, providing dental services, baking bread, mowing lawns. For each hour of work you are paid local money at an agreed rate, for example, 10 “time dollars”. Then, with the money received, you can purchase either other services registered in the so-called. "time bank", or goods in stores participating in the project.

About time banks

The first “time dollars” were introduced in 1986 and gained enormous popularity mainly in the USA and Japan. The most successful examples of the implementation of this scheme: Ithaca Hours (Ithaca, New York: more than 500 local businesses took part in the project - from medical centers, restaurants and cinemas to farmers and real estate agencies), the Japanese “health currency”, ROCs (Robust Currency System). The latest system (ROCs) not only combines time banking and mutual lending, but also consistently implements the classic function of Gesell's free money - demurrage.

The most powerful free money system is the Swiss WIR (Wirtschaftsring-Genossenschaft, Economic Circle Cooperative), which has 62 thousand participants and provides an annual turnover of the equivalent of 1 billion 650 million Swiss francs (!). Despite the fact that WIR is not a full-fledged free money system, since it lacks demurrage, it is in fundamental opposition to credit money, since it is completely interest-free. Loans provided by WIR Bank to system participants are also interest-free.

V.A. Efimov - Lecture for FSB employees - introduction to KOB

Priceless dollar part 1.1

Priceless dollar part 1.2

The priceless dollar part 2.1

Priceless dollar part 2.2

Zeitgeist - Part 1

Zeitgeist - Part 2

Zeitgeist - Part 3

Ring of Power

Cymatics

Forward to the past. Movie 1 of 8

Secret Knowledge and Science

Demon Cratius - Parable

Parable from the book “New Civilization” of the series “Ringing Cedars of Russia”

Slowly the slaves walked one after another, each carrying a polished stone. Four lines, one and a half kilometers long each, from the stone cutters to the place where the construction of the fortress city began, were guarded by guards. For every ten slaves there was one armed warrior-guard. Away from the walking slaves, on the top of a thirteen-meter high man-made mountain of polished stones, sat Cratius, one of the high priests; for four months he silently watched what was happening.. No one distracted him, no one even dared to interrupt his thoughts with a glance. Slaves and guards perceived the artificial mountain with a throne on top as an integral part of the landscape. And no one paid any attention to the man, now sitting motionless on the throne, now walking along the platform on the top of the mountain. Cratius set himself the task of rebuilding the state, strengthening the power of the priests for a thousand years, subjugating all the people of the Earth to them, making them all, including the rulers of states, slaves of the priests.

It was an unusually fortunate situation. The slaves prepared a plan for an uprising. It is rational, this plan, and can clearly lead to a positive intermediate result for them. But with just a few phrases I will force not only them, but also the descendants of today’s slaves, and even the rulers of the earth to be slaves for thousands of years to come.”
In the morning, at a sign from Cratius, the head of the guard removed his shackles. And the very next day the remaining five priests and the pharaoh were invited to his observation platform. Cratius began his speech to the audience:
- What you will hear now should not be written down or retold by anyone. There are no walls around us, and no one will hear my words except you. I have come up with a way to turn all people living on Earth into slaves of our pharaoh. It is impossible to do this even with the help of numerous troops and exhausting wars. But I will do this in a few sentences. Only two days will pass after they are pronounced, and you will see how the world will begin to change. Look: below, long lines of chained slaves are carrying one stone at a time. They are guarded by many soldiers. The more slaves, the better for the state - that’s what we always thought. But the more slaves there are, the more one has to fear their rebellion. We are strengthening security. We are forced to feed our slaves well, otherwise they will not be able to do hard physical work. But they are still lazy and prone to rebellion. Look how slowly they move, and the lazy guards do not chase them with whips and do not beat even healthy and strong slaves. But they will move much faster. They won't need guards. The guards will also turn into slaves. This is how you can do something like this. Today, before sunset, let the heralds carry the decree of Pharaoh, which will say: “With the dawn of a new day, complete freedom is granted to all slaves. For each stone delivered to the city, a free person will receive one coin. Coins can be exchanged for food, clothing, housing, a palace in the city, and the city itself. From now on you are free people."
When the priests realized what Cratius had said, one of them, the eldest in age, said:
- You are a demon, Cratius. Your vision of demonism will cover many earthly peoples.
“Let me be a demon, and let people in the future call what I have planned as democracy.”

The decree was announced to the slaves at sunset; they were amazed, and many did not sleep at night, pondering a new happy life.
The next morning, the priests and the pharaoh again climbed to the platform of the artificial mountain. The picture that appeared before their eyes amazed their imagination. Thousands of people, former slaves, raced to drag the same stones as before. Dripping with sweat, many carried two stones. Others, who had one each, ran, kicking up dust. Some guards were also carrying stones. People who considered themselves free - after all, the shackles had been removed from them - sought to get as many coveted coins as possible in order to build their happy life.
Cratius spent several more months on his site, watching with satisfaction what was happening below. And the changes were colossal. Some of the slaves united in small groups, built carts and, loaded to the brim with stones, pouring sweat, pushed these carts.
“They are still inventing many devices,” Cratius thought to himself with satisfaction, “and now internal services have appeared: distributors of water and food. Some of the slaves ate on the go, not wanting to waste time on the way to the barracks for food, and paid with the coins they received. Wow, they also have healers: they provide assistance to the victims right on the go, and also for coins. And traffic controllers were chosen. Soon they will choose their bosses and judges. Let them choose: they consider themselves free, but the essence has not changed, they are still carrying stones...”
So they run through millennia, in the dust, sweating, dragging heavy stones. And today the descendants of those slaves continue their senseless flight...

And so, dear friend, if you have reached these lines without missing anything from the blog, then congratulations, you can be called an awakened person! I hope you too will help someone else wake up...!

Compiled by Yan Leshchenko

December 12th, 2012

We continue to study the interests of friends on this blog using the example of questions asked in. Raised an interesting topic escapistus :

"Let's discuss Gesell's money as a wonderful way out of this situation."

To be honest, until this moment I had no idea that such things existed, much less what they were needed for, but now we will find out everything together.

"...The coin is a miracle of exchange,
but she's also a scam
in the service of privilege."
(Fernand Rodel)

Interest-free money has been known for a long time. From the 12th to the 15th centuries in Europe, money was used in circulation, which was called bracteates. They were issued by individual city-republics, large feudal lords and even bishoprics. This money was used to exchange goods and collect taxes. Typically, it was a coin made of an alloy of gold or silver. Worn (thin) gold or silver coins were replaced once a year.

They were withdrawn from circulation, melted down and replaced with newly minted ones. At the same time, their value was reduced by 25%, which was seized as a fee or “minting fee.” It was not profitable to accumulate such money, since it lost part of its value every year. As a result, Michelangelo, Leonardo da Vinci, Raphael, Titian, and a huge number of works of jewelry and architectural monuments appeared to humanity. People invested money in real values, and did not create storage facilities for specie.

But since such money was used simultaneously to collect taxes, and its denomination was constantly decreasing, they were not very popular. Therefore, at the end of the 15th century, the so-called “eternal pfennig” was introduced, that is, money that did not depreciate. Interest began to be charged again, and ever greater wealth was concentrated in the hands of fewer and fewer people, with all the social and economic problems that entailed.

In 1890, Silvio Gesel formulated the idea of a “natural economic order” that ensures the circulation of money, in which money becomes a public service for which people pay a user fee. Instead of paying interest to those who have more money than they need, people would have to pay a small withdrawal fee to get the money back into circulation.

Gesel was a successful German merchant in Buenos Aires who began to study the problems of money under the influence of the crisis of the late 1880s, which was especially severe in Argentina.

Let's look briefly at his theory. At the end of the 19th century, Silvio Gesel, being a merchant, noticed that sometimes his goods sold quickly and for a good price, and at other times they sold slowly, with a tendency for prices to decrease. He began to think about this and look for the reasons for this course of events, and quickly realized that such ups and downs depended little on the demand for his goods or their quality, but almost exclusively on the price of money in the money market.

Gesel began to monitor such fluctuations, and soon came to the conclusion that people bought when interest rates were low, and did not buy when they were high. The reason that there was either less or more money was the desire or unwillingness of the owners of money to give it at interest. If they could get less than 2.5%, the prevailing tendency was to keep the money, leading to less investment, which in turn led to bankruptcies and fewer jobs. If, after some time, people were again willing to pay more interest for the money they received, it was again willingly provided. Thus, a new economic cycle began. At the beginning, interest rates and commodity prices were high, then, with a gradual increase in goods and an accelerated increase in the money supply, interest rates fell again and finally led to a capital “strike” again.

Silvio Gesell explained this phenomenon by the fact that, unlike all other goods and services, money can be kept for oneself with virtually no costs. If one person has a basket of apples, and another has money, then the owner of the apples will be forced to sell them after a short period of time so as not to lose his goods. And the owner of the money can wait until the price comes into line with his ideas. His money does not require “warehouse costs”, but on the contrary, provides “liquidity benefits”, i.e., having money in your pocket or in a bank account, you can wait for the right moment to come or the price to drop to such a level when the goods profitable to buy.

Gesel concludes: if we could create a monetary system in which money, like all other goods and services, would require storage costs (and such storage costs would be based on an average of 5% per annum, which would exactly correspond to the interest that money has paid throughout history), the economy would be freed from the ups and downs of money speculation. He proposed creating such conditions within the framework of this monetary system that the money would “rust”, i.e. would be subject to a user fee.

It may seem that the name of Silvio Gesell is shrouded in darkness on both sides of the ocean due to biographical circumstances: the author of the work “Naturliche Wirtschaftsordnung” (Naturliche Wirtschaftsordnung, published in two parts in 1906 and in 1911. In 1929 it was translated into English - The Natural Economic Order) was self-taught, which by definition should cause contemptuous ridicule among the bison of academic science.

Such an assumption, however, is far from the truth. Already three years after Gesel’s death (1930), Yale University professor and leading expert in the theory of money circulation and credit, Irving Fisher, in his work “Stamp Scrip”, expressed admiration for Gesel’s theory: “Medicine owes a lot to untrained minds, at least least, to minds untrained in medicine. Even Pasteur, although a professional scientist, was not a doctor, and the laryngoscope was improved, many claim - even invented - by the prominent Spanish singer Manuel Garcia. The recently deceased Silvio Gesell was a German entrepreneur and quasi-economist. He lived in Argentina and wrote many of his works in Spanish. In 1890, while in Argentina, Gesel proposed replacing money with “brand certificates,” the very same ones that are now so widespread in our country...” (USA).

Following Irving Fisher, Gesel's theory was recognized by other academicians, including the British authority on authorities John Maynard Keynes. In the mid-30s, Freigelds were successfully introduced in Austria, Switzerland, Germany and - almost everywhere - in the United States of America during the Great Depression. It seemed that the cause of Silvio Gesell was guaranteed a stellar future, but very quickly both his name and his theory were completely erased from public consciousness. Why?

All attempts to put into practice the theory of free money in the 30s had a common fate: in the shortest possible time (maximum - one year, and usually within two to three months) they demonstrated phenomenal results in overcoming the darkest manifestations of economic depression - they eliminated unemployment, radically increased tax collection, revived municipal activity, caused a flourishing of local trade and - most importantly! — eliminated the shortage of real money, driven by deflation into bank vaults.

After the triumph, however, a hangover quickly set in: as soon as the news of the miracle money spread throughout the area, there was a massive desire from neighboring municipalities and communities to join the experiment. Next, the national Central Bank intervened, under one pretext or another (as a rule, charges were brought against the monopoly on the issue and circulation of funds) and closed the project. In particular, a similar scenario was played out in Germany (the Wära experiment in Schwanenkirchen) and Austria (free money in the Alpine town of Wörgl). As for the United States, thousands of experiments in introducing free money from ocean to ocean were successfully strangled by the “New Treaty” signed with the nation unilaterally by the 32nd degree Freemason F.D. Roosevelt, who completed the “financial revolution” of 1913, completely transferring the right to issue dollars to the private structure of the Federal Reserve System. Moreover, on April 5, 1933: the President signs “Decree No. 6102”, prohibiting citizens and organizations from having gold savings: “I, Franklin D. Roosevelt, President of the United States of America, declare a national emergency has arisen and, by the authority vested in me by law, impose prohibiting the accumulation of gold coins, gold bullion, and gold certificates in the continental United States by individuals, partnerships, associations, and corporations...” The stunned public was asked to surrender all of their gold holdings by May 1, 1933, in exchange for paper Federal Reserve bonds.

After World War II, Gesel’s name, along with his free money, was shrouded in mystery and “a conspiracy of silence on the part of academic science” had nothing to do with it. The real reason lies in Keynes’s prophecy, contained in the epigraph: Gesel’s idea of Freigeld not only undermines the very foundations of the world financial system, but is also the most effective of the actually existing ones and, moreover, a method that has been repeatedly and successfully tested in practice to eliminate the dictates of credit money. In such a context, the danger to the status quo of the global financial elite hidden in the Freigeld concept is incomparably higher than from all variations on the theme of Marx’s Capital.

In the thirties of our century, followers of Gesel's theory conducted a number of experiments that showed the correctness of the proposed measures. In Austria, France, Germany, Spain, Switzerland and the USA, attempts were made to introduce such money to eliminate unemployment. The most successful experiment was in the Austrian city of Wörgl in 1932 - 1933. The results exceeded all expectations. When throughout Europe there was a decline in production and rising unemployment, in Wörgl unemployment fell by 25% and production increased. But the powers that be did not allow the positive experience to be transferred to the state financial system. (about the experiment)

Similar events took place in the Weimar Republic (1924-1933). After the hyperinflation of 1923, the Reichsmark was introduced in 1924, thus returning to the gold standard. That is, Reichsmarks were issued in proportion to the gold reserves at the disposal of the republic. Each bill corresponded to a certain amount of gold, and it could be exchanged for this gold. The gold coin republic existed until Black Friday 1929. The economic crisis that followed forced the Reichsbank to return part of the gold reserves borrowed from the United States.

The Reichsmark no longer corresponded to the gold denomination; there was more money than available gold. To avoid hyperinflation, the then president of the Reichsbank, Schacht, began to gradually reduce the amount of money in circulation. A shortage of money arose, which led to an increase in interest rates for loans, as a result of which capital investment in production decreased, production and trade began to decline, then the bankruptcy of firms, and a significant increase in unemployment. Suddenly, the impoverished population began to demand radical changes in society, and then Hitler appeared on the political scene, who was raised by international capital in order to protect himself from expropriation by the German population.

After the end of the First World War in 1918, the beginning of the next one was predicted by Silvio Gesell. When peace was spoken and written all over the world, and various organizations in defense of peace arose, he wrote a letter to the publisher of the Berlin newspaper Zeitung am Mittag with the following content: “Despite the fact that the peoples take a sacred oath to brand war for all time, despite the call millions “No to war!”, despite all hopes for a better future, I must say: if the current monetary system preserves the interest economy, then I dare to say today that in less than 25 years we will be faced with a new, even more destructive war. I see the development of events very clearly.

Today's technology will allow the economy to quickly reach its highest productivity. Despite significant losses in the war, there will be a rapid formation of capital, which, due to excess supply, will reduce interest rates. Then the money will be withdrawn from circulation. This will lead to a reduction in industrial production, armies of the unemployed will be thrown onto the streets... Wild, revolutionary sentiments will awaken among the discontented masses, and the poisonous shoots of super-nationalism will again break through. No country will be able to understand the other, and the end can only be war." Thus, by studying the behavior of the market and knowing the role of interest in society, Silvio Gesell absolutely accurately predicted the development of the political situation in the world and even the timing of the start of the next world war.

The modern economy is characterized primarily by the fact that interest on loans and the money supply in circulation are growing much faster than the growth of gross national income. And this applies to all countries. The exception is Malaysia, which uses interest-free money and whose economy has been largely unaffected by the current crisis. For those who love arithmetic calculations and do not fully understand what compound banking interest is, we offer a small arithmetic calculation. Let D be the amount that will be accrued according to compound interest to the investor on the invested amount D0 for t years with an annual loan interest equal to i.
Then

D = D0 * (1 + i)t, where i is the value in absolute units.

Now imagine that your distant ancestor deposited 1 kopeck in the bank in the year of the Nativity of Christ at 4% per annum. Today you would have a fortune with which you could buy more than 10 thousand balls of pure gold the size of the globe. The curious reader can calculate more accurately for himself.

Thus, loan interest is the main, permanent source of inflation. Ordinary citizens do not even realize that inflation acts as a form of taxation, through which the government shifts the problems of its growing debt onto the shoulders of citizens. "...Inflation is beneficial to those who have the monopoly right to issue money into circulation. The essence of the matter is very simple: you can make expenses, covering them with new and new batches of printed currency. Inflation is a way of financing excessive expenses. It is clear that, ultimately ", the financier of these expenses turns out to be the population, which receives less and less value in each, say, ruble. So inflation is actually a tax on the value of money."

The second distinctive feature of modern world economies is the ever-accelerating concentration of capital among a very limited number of individuals. An ever-increasing number of states and peoples are becoming poor, and an ever-smaller number of countries are accumulating the wealth created by the labor of all mankind. The same redistribution through the use of interest rates occurs within all countries. The rich become richer, the middle ones become poor, and the poor become completely poor. Thus, social material of enormous explosive force is accumulating throughout the world.

In Germany, in 1982, 10 groups of 2.5 million families in each were studied, divided by levels of annual family income. “A comparison of interest receipts and payments for these 10 population groups showed that 80% of them pay more in interest than they receive, 10% receive about the same as they pay, and the richest 10% receive approximately twice as much as "they pay. This is, in total, the part that the first 80% of the population lost. This fact perfectly explains the essence of the mechanism, perhaps the most important one, allowing the rich to become richer and the poor to become poorer."

Where can I get money? This problem worries everyone today. In fact, even a child knows the solution to this problem - print! In any region, rural area or municipality, you can put your own interest-free money into circulation, which will function in parallel with state money. For this purpose, against cash security or against well-liquid goods (grain, coal, non-ferrous metals, etc.), bank obligations are issued in the form of banknotes for cash circulation and credit money for credit operations.

The following rules for the circulation of cash for citizens are being introduced: this banknote is accepted as payment within a month; with the beginning of the next month, another banknote is introduced into circulation, which will function for the same month, etc.; those citizens who, at the beginning of the next month, have banknotes of the previous month in their hands, will be required to exchange them for bills of the new month, for which they will be charged a fee (fine for withdrawing money from circulation) in the amount of 1% of the value of the bill being exchanged. Legal entities will be charged a monthly application fee of 1.5% of the amount remaining in their accounts on the last day of the month. The denomination of newly issued money is strictly equal to the national currency. The bank issuing such money will be obliged to accept it from citizens for exchange into national currency with payment to the bank of 0.5% for the service provided.
Loans in this currency are issued interest-free. The bank charges the client a fee for the service provided and for the risk, but not more than 2% of the loan amount.

This kind of money will quickly enough allow you to radically change the situation in the economy. Since the money introduced in this way is “bad money,” it will very quickly force the national currency out of circulation (Gresham’s law). Cash will stop flowing out of this region, due to which the domestic market will stabilize. The circulation speed of new money is 2 - 3 times higher than the existing ones, thus the amount of money needed for circulation will be reduced by two or more times. The national currency will be freed up for purchases in other regions. Since the market will be saturated with the required amount of money, pensions, salaries and various benefits will be paid on time. Due to interest-free loans issued in the new currency, prices for goods will decrease by 40 - 70%. The saturation of the domestic market with goods will sharply increase due to the intensive influx from outside. People will stop accumulating money, and it will become more profitable to invest it in production and trade. Unemployment will decrease or disappear. Inflation will stop because its main source will disappear.

In today's world, more than 90% of what we call "money" is actually numbers in a computer. And the new “free or neutral money” could be put into circulation exclusively in non-cash form (for some time the new money should function parallel to the old ones). And it is not difficult to tax non-cash neutral money. Each entity that had neutral money remaining in its account at the end of the day would pay tax on the balance of the money. To avoid tax, entities could transfer excess money to banks under certain conditions (for example: - for at least a month).

Although neutral money will not bring interest to its owner, it will retain its stable value. As soon as interest on money disappears, inflation will be unnecessary and will disappear.

Whoever receives the loan also does not pay interest, but only a premium (insurance) for the risk and a loan administration fee, which are still included in any bank loan (usually from 1.5 to 3.5%).

Banks would continue to function as before, except that they would be more interested in issuing loans, since they too would be subject to the mechanism of payment for the money at their disposal. In turn, banks should be able to “hand over” excess money to the central bank to avoid taxes.

The considered system of introducing “neutral money” into circulation could remove many of the contradictions of the financial order existing in the modern world and would contribute to the organization of a more equitable and efficient economy.

Studying the dynamics of the modern financial system, which is in a continuous and deepening crisis, many scientists come to the conclusion that humanity, using loan interest, has two options:

Die from an economic and social catastrophe, or
. die from an environmental disaster,
since the modern financial system contradicts the requirements of preserving and maintaining the ecological environment.

There is no third!

Sandbox

jeweler July 15, 2012 at 10:22 am

Freigeld Collision - peer-to-peer cryptocurrency

Freigeld Collision is a peer-to-peer cryptocurrency based on the idea of free money and the extraction of money from the search for collisions of hash functions.

Preface

Lately I’ve been interested in cryptography, having figured out what and how I formulated ideas for a new cryptocurrency.

Free money theory

Free money (German: Freigeld) is a concept introduced by the German economist Silvio Gesel to denote money used only as an instrument of exchange (a measure of value and a medium of exchange), but free from interest.

At the heart of Freigeld's theory is the assertion that money should be "an instrument of exchange and nothing more." According to Gesell, traditional forms of money are extremely ineffective, since they “disappear from circulation whenever there is an increased need for them, and flood the market at times when their quantity is already excessive.” Such forms of money “can serve only as an instrument of fraud and usury and should not be recognized as usable, no matter how attractive their physical qualities may seem.” Silvio Gesell wrote these words in an era when the gold standard was still the generally accepted condition for the issue of paper money. The subsequent refusal of any security deprived money of its last - physical - attractiveness. If Gesell had stopped at criticizing the imperfections of monetary systems, his name would have long ago disappeared into the sands of history. Moreover, Gesell's critical analysis is not even close to the monumental vivisection performed by Karl Marx on capitalism. Gesell's genius lies elsewhere: in his conclusions and - most importantly - practical recommendations. For Marx, “evil” is in surplus value, and the restoration of justice involves the withdrawal of this value from one class in favor of another. For Gesell, “evil” is in the credit nature of money, and the restoration of justice presupposes the elimination of this credit nature.

Modern money, designed by definition to facilitate the exchange of ordinary goods, has, unlike these same goods, a unique ability: it can multiply itself without much effort on the part of its owner. A peasant who delivers fruit to the market is vulnerable to the time factor: if the goods are not quickly sold, they will either fall in price or spoil. Money in the buyer's pocket has no such disadvantages. In addition, money can be kept not in your pocket, but in a bank, where it will grow. Apples, tomatoes, a personal computer, and a car rot, sour, depreciate and depreciate over time, but money retains the advantages of a non-perishable product. Of course, only in theory, but not in practice, since credit money, originally conceived as a valuable commodity with an increasing value, devours itself and depreciates due to excess emission. However, money in its modern form has turned into an ideal commodity, which determines its disinterest in serving the market of traditional goods and services, from where it is withdrawn for self-satisfaction - be it in the form of time deposits, securities, bonds, options, futures, warrants , swaps and a host of virtual derivatives that finally brought down the world economy. It can be assumed that the difference between free money and traditional money is that they do not accrue interest. But Silvio Gesell put forward an idea that was even more revolutionary for modern times: it is not enough to deprive money of the ability to generate profit through interest, it... must be charged with interest! In other words, a fee must be charged for the use of money: “Only money that becomes obsolete like newspapers, rots like potatoes, rusts like iron and evaporates like ether can become a worthy instrument for the exchange of potatoes, newspapers, iron and ether. Because this is the only money that buyers and sellers will not choose over the product itself. And then we will begin to part with goods for money only because we need money as a means of exchange, and not because we expect advantages from possessing money itself.”

Will demurrage hit ordinary people? Well, let's see: 90% of people spend as much money as they earn, and most of them generally live paycheck to paycheck. Let's say you received 30 thousand rubles on the 1st day of the month and until the next payday you spend a thousand rubles a day on food, clothing, utilities, child support, and entertainment. If, for example, demurrage is collected on the last day of the month, then you will not lose anything at all, because at the moment when every ruble should lose 2 kopecks, the wind is blowing in your pocket. And the next day you received your salary and live in peace for another month.

Peer-to-peer cryptocurrency

In general, Freigeld Collision should be similar to the Bitcoin cryptocurrency.

Generation

Money extraction is based on searching for collisions of hash functions. Let me give you an example: user A finds a collision for two strings (str1, str2), md5(str1) = md5(str2). Next, he selects one of these lines, signs it with his private key and sends it to the network. Other users check whether such a string has already been generated; if not, then they open a transaction to add a new coin (each coin is identified by two strings obtained from a hash function collision). Next, user A signs and sends two lines received as a result of the collision. Other users check that md5(str1) = md5(str2) and accept the transaction. As a result, a new coin was generated in the system which belongs to user A.

Demerezhd

Each coin, when generated, receives a lifetime of, for example, 1 month. Example. User A transfers an outdated coin to user B. User B looks in his database that this coin has expired and refuses to accept the transaction.

State

The state can mine coins and build data centers to search for collisions. The government may begin issuing its coins in physical form in the form of metal coins and paper money, with a lifespan indicated on them. For example, if you come to a store and try to pay for an item with an outdated bill, the seller will not accept that kind of money.

Sources:
Wikipedia
Book “High Communitarianism as a Russian Idea”

“I am convinced that the future will learn more from Gezzel than from Marx.”

John Maynard Keynes

Johan Silvio Gesell (Johann Silvio Gesell)- German entrepreneur, financial theorist and social reformer, author of the theory of “free economy” (from German: Freiwirtschaft) and free money Freigeld. - (Wikipedia)

In the mid-30s, Freigelds were successfully introduced in Austria, Switzerland, Germany and - almost everywhere - in the United States of America. It seemed that the cause of Silvio Gesell was guaranteed a stellar future, but very quickly both his name and his theory were completely erased from public consciousness. Why?

The real reason lies in Keynes’s prophecy, contained in the epigraph: Gesell’s idea of Freigeld not only undermines the very foundations of the world financial system, but is also the most effective of the actually existing ones and, moreover, a method that has been repeatedly and successfully tested in practice to eliminate the dictates of credit money. In such a context, the danger to the status quo of the global financial elite hidden in the Freigeld concept is incomparably higher than from all variations on the theme of Marx’s “Capital”.

At the heart of Freigeld's theory is the idea that good money should be "an instrument of exchange and nothing more." According to Gesell, traditional forms of money are extremely ineffective, since they “disappear from circulation whenever there is an increased need for them, and flood the market at moments when their quantity is already excessive.” Such forms of money “can serve only as an instrument of fraud and usury and should not be recognized as usable, no matter how attractive their physical qualities may seem.”

Silvio Gesell put forward a revolutionary idea for modern times: it is not enough to deprive money of the ability to generate profit through interest, it must be subject to interest! In other words, a fee must be charged for the use of money: “Only money that becomes obsolete like newspapers, rots like potatoes, rusts like iron and evaporates like ether can become a worthy instrument for the exchange of potatoes, newspapers, iron and ether.

Because this is the only money that buyers and sellers will not choose over the product itself. And then we will begin to part with goods for money only because we need money as a means of exchange, and not because we expect advantages from possessing money itself" ( Silvio Gesell, The Natural Economic Order, Part 4, Ch. 1 Free Money).

I think it will be interesting to know that free money has been used for a long time in... Ancient Egypt! "Units of money with demurrage ( One of the modern synonyms for Freigeld (along with “neutral”, “negative”, “free” money): “You can compare money to a railway carriage, which, like money, facilitates the exchange of goods.

It goes without saying that the railroad company does not pay a premium (interest) to the user of the car for unloading it so that it can continue to be used; but the user pays a small “demurrage fee” if he has not ensured the unloading of the wagons.

This is basically all we should do with money to eliminate the negative impact of interest. Each user pays a small “parking fee” if they hold the money longer than necessary for exchange purposes” (Margrit Kennedy.

"Money without interest and inflation")) in Egypt, rough fragments of pottery, called “ostraka”, were used. In essence, these fragments were receipts for deposits made by farmers at local warehouses: the farmer handed over grain and received an "ostraca" ( Bernard Lietard. "Soul of Money").

And the information is absolutely sensational that various variations on the Freigeld theme served as the main form of money in Medieval Europe from the 10th to the 13th centuries!

In the context of this tradition of local lords, increasing revenue through the "Renovatio Monetae" (literally "Resumption of Coinage") was established throughout. For example, in 973 Edgar completely changed the coinage of the English penny.

Almost six years later, the young king Ethelred II began minting a new coin. He has repeated this since then at approximately equal intervals. The main motivation was that the royal treasurers would only give three new coins for four old ones, which was equivalent to a tax of 25% every six years on any capital contained in the coins, or approximately 0.35% per month. Thus, the new coinage was a crude form of payment for storage" ( Ibid.).

This is what it looks like. The obverse side of Freigeld is generally similar to regular money. It indicates the value equivalent (for example, one dollar), the name of the issuer, the conditions and terms of exchange for regular money. On the reverse side there are 52 cells on which stamps must be affixed weekly.

Let’s assume that by agreement the reference day of the week is Wednesday. This means that a stamp certificate can be in circulation with the old stamp on Thursday, Friday, Saturday, Sunday, Monday and Tuesday, and on the following Wednesday the last certificate holder is obliged to stick a new stamp. The two-cent stamp is being sold by the authorities implementing the free money project.

However, the self-sufficiency of brand certificates is a minor matter. The main thing is that the weekly expiration of free money leads to an unprecedented turnover!

Judge for yourself: every owner of a stamp certificate strives to get rid of it as soon as possible in order not to pay a tax in the form of a two-cent stamp next Wednesday. Ultimately, all free certificates on Tuesday evening are accumulated by retailers, wholesalers or manufacturers, who paste stamps - a kind of tax - with great pleasure: it is this energetic money that provides them with unprecedented trade turnover.

According to Irving Fisher's calculations, the turnover of free money in hundreds of American cities during the Great Depression was at least 12 times (!) higher than the turnover of ordinary dollars! It is this property of free money that allows us to speak about its unique efficiency, which, as is known, is determined by the formula: “volume multiplied by circulation velocity.”

Triumph

The model of the functioning of free money, described by Irving Fisher, was literally implemented verbatim in the very first attempts to apply Gesell's concept in practice. First in Germany, coal mine owner Max Hebecker revived from the ashes the Bavarian village of Schwanenkirchen, whose population (500 people) had been living hand to mouth for the past two years on state unemployment benefits:

« Just a few months after the resumption of the mine, Schwanenkirchen was unrecognizable - the workers and shop owners had completely paid off all their debts, and a new spirit of freedom and life literally hovered over the city. News of the village's prosperity in the midst of the economic depression that struck Germany instantly spread throughout the area. Reporters from all over the country wrote about the "Schwanenkirchen miracle", and even in the United States one could read about the experiment in the financial sections of all major newspapers».

A year later, the German experience was triumphantly repeated by the mayor of the Austrian city of Wörgel, Michael Unterguggenberger. After the introduction into circulation of free money created according to the Freigeld type ( Stamps for Wörgel's free money were pasted once a month, not weekly), the city, whose tax arrears increased from 21 thousand shillings to 118 thousand in five years, began repayment in the first month (4,542 shillings). Over the next six months, the emission of “free shillings”, equivalent to 32 thousand ordinary shillings, provided public works worth 100 thousand shillings: 7 streets were paved, 12 roads were improved, sewerage was expanded into two new blocks, a new park was created, a bridge was built and new jobs for 50 unemployed.

The most powerful free money system - Swiss WIR(Wirtschaftsring-Genossenschaft, Economic Circle Cooperative), numbering 62 thousand members and providing an annual turnover of the equivalent of 1 billion 650 million Swiss francs (!). Despite the fact that WIR is not a full-fledged free money system, since it does not have demurrage ( WIR arose in 1934 and initially, as befits classic free money, it involved a fee for demurrage, but after the Second World War demurrage was abandoned), it is in fundamental opposition to credit money, since it is completely interest-free. Loans provided by WIR Bank to system participants are also interest-free.

Well, for those who want to invest, nothing changes - Gezzel does not cancel stocks and bonds as investment instruments

Now with the help of computer technology you can make EVERYTHING MUCH MORE CONVENIENT.

What do you need?

1. Understanding by the local community of the functions and purpose of money.

2. Activists, enthusiasts, interested users of the local financial system.

3. Network infrastructure (local networks, Internet access is good, but not necessary).

4. Improve, install and maintain software that manages cash flow.

5. Management, training, support.

I see the most promising option as a hybrid of the LETS (or CES) settlement system with a tiny fee for idle money. Such systems, as practice shows, make it possible to revive the most depressed regions. There would be resources and people willing to work.

(Summary of the article by Sergei Golubitsky
"Business magazine" No. 18 dated October 02, 2007.)

(1930-03-11 ) (67 years old) A place of death Oranienburg, Germany A country Scientific field economics, entrepreneurship Quotes on Wikiquote Media files on Wikimedia Commons

The first part of his classic work, “The Exercise of the Right to Full Time Work,” was published in 1906 in Switzerland, and the second in 1911 in Berlin under the title “The New Doctrine of Interest.” Both parts were published in Berlin and Switzerland during the war (1916) and went through six editions during his lifetime, the last of which is entitled "Free State and Free Money as the Path to a Natural Economic Order." In an English translation (by Philip Rai), this work was published under the title “The Natural Economic Order.”

In 1918, shortly after the end of the First World War, when everyone was talking about peace, he actually predicted the outbreak of the Second World War in a letter to the publisher of the Berlin newspaper Berliner Zeitung am Mittag:

Despite the fact that peoples take a sacred oath to brand war for all time, despite the call of millions: “No to war!”, despite all hopes for a better future, I must say: if the current monetary system preserves the interest economy, then I will decide to affirm today that in less than 25 years we will be faced with a new, even more destructive war. I see the development of events very clearly. Today's technology will allow the economy to quickly reach its highest productivity. Despite significant losses in the war, there will be a rapid formation of capital, which, due to excess supply, will reduce interest rates. Then the money will be withdrawn from circulation. This will lead to a reduction in industrial production, armies of the unemployed will be thrown onto the streets... Wild, revolutionary sentiments will awaken in the discontented masses, and the poisonous shoots of super-nationalism will again break through. Neither country will be able to understand the other anymore, and the end can only be war.

In April 1919, Gesell, at the invitation of Ernst Niekisch (then a left-wing socialist), served as finance minister and member of the socialization commission in the short-lived revolutionary cabinet of the Bavarian Soviet Republic, electing the Swiss mathematician Theophilus Christen and the economist Ernst Polenske as his assistants. He tried to put his theoretical constructs into practice, but after 7 days of his tenure, the Communists formed a new government, in which he was not included. After the suppression of the Bavarian revolution, Gesell was detained and subsequently convicted by a military tribunal. Because of his involvement in the government of the Soviet republic, the Swiss authorities denied Gesell the opportunity to return to his farm in Neuchâtel. He spent the last decade of his life in Berlin and Switzerland, devoting himself to promoting his ideas.

Key Ideas [ | ]

Silvio Gesell was a vegetarian who believed that the earth belonged to all people equally, regardless of race, gender, class, ability or religion.

His economic views were based on the abolition of interest on loans and the nationalization of land. Gesell came to the conclusion that a uniform velocity of money circulation is an important condition for a crisis-free economy. Money should serve only as a medium of exchange and not as a store of value. He believed that the “natural economic order” that ensures the circulation of money is an order in which money becomes a paid government service, the so-called “negative interest money”, when the current owners of money are obliged to regularly transfer a certain small amount to the state as payment for the right use government issued money.

Now the most powerful free money system is the Swiss WIR (German). Wirtschaftsring-Genossenschaft, Economic Circle Cooperative), with 62 thousand members and an annual turnover of the equivalent of 1 billion 650 million Swiss francs. This system was founded in 1934 as a mechanism to overcome the payment crisis that developed under the influence of the Great Depression. However, already in 1952 they were forced to abandon Gesell's theory of “free money” and now use interest on loans.

A logical continuation of Gesell’s ideas are the various versions of “local exchange trading systems” (LETS) that exist today in both the United States and Europe.

The meaning of Silvio Gesell[ | ]

Criticism [ | ]

Critics consider Gesell's ideas untenable due to the fact that depreciating money causes inflation. In the short run, the Gesell tax increases the velocity of money, but in the long run it leads to [ ] :

reduction in the purchasing power of the population;
a decrease in trade turnover due to the low purchasing power of the population;
decrease in demand for goods with high