How to Fulfil the UN Sustainability Goals: Rethinking the Role and Concept of Money in the Light of Sustainability

Foreword
Preface
Contents
Part I: Money and Its Role in the Economy
	Chapter 1: Introduction
		References
	Chapter 2: What Is Money?
		2.1 The Functions of Money
		2.2 Money Creation: Some Preliminary Thoughts
		2.3 Money Creation: The Money Multiplier Theory
			2.3.1 Banks Lend Out Customer’s Money
			2.3.2 Lending Customer’s Money Does Not Increase the Balance Sheet Total
			2.3.3 Lending Increases the Money Supply Throughout the Banking Sector
			2.3.4 Every Loan Expands the Money Supply
			2.3.5 Summary
		2.4 Money Creation “Ex Nihilo” (Out of Nothing)?
			2.4.1 Supposed Balance Sheet Expansion
			2.4.2 Magic Money Creation?
			2.4.3 Contradictory Views in Literature
		2.5 How Do the Different Views Come About?
			2.5.1 Where Is the 99% Interest Margin?
			2.5.2 No Balance Sheet Expansion Through Loans
			2.5.3 Granting of Loans Provokes an Asset Swap
			2.5.4 The Origin of the Confusion: Banks Are Not Only Financial Intermediaries
			2.5.5 Werner’s “Empirical Test”
			2.5.6 A Clear Definition of What We Call Money Is Crucial
			2.5.7 Summary
		2.6 Discussion
			2.6.1 The Effect of a 100% Reserve Requirement (Full Reserve Banking)
			2.6.2 Money Is Always the Counterpart of Debt
			2.6.3 Money Being the Counterpart of Debt Is Not a Problem
		2.7 Conclusions
		References
	Chapter 3: Money Is Like the ‘Blood’ of the Economy
		3.1 Introduction
		3.2 Virtual Wealth: Why Money Has No Intrinsic Value
		3.3 Money Is the Measure of Value
			3.3.1 The Exchange Value and the Monopolistic Character of Money
			3.3.2 The Role of Markets
			3.3.3 Money Does Not Have Value but Represents Value
		3.4 The Money Illusion and the Importance of Perception
		3.5 The Problem Is the Unnatural Design of Our Money
		References
Part II: Money and Unsustainability in Stricto Sensu
	Chapter 4: The Growth Imperative Inherent in Our Financial System
		4.1 The Unnatural Storability of Money as Origin of Interest
		4.2 Demystifying the Role of Interest
			4.2.1 Interest Is Not Caused Be the Keynesian Liquidity-Preference
			4.2.2 Interest Is Not Natural
			4.2.3 Interest Is Not the Price of Money
			4.2.4 Interest Is Not a Premium for Abstaining from Consumption
			4.2.5 Interest Is in Most Cases Not a Risk Premium
			4.2.6 The Interest Margins of Banks Are Not the Main Problem
		4.3 Interest Makes the Money Supply and Debt Grow Exponentially
		4.4 Inflation, Speculation, Crisis and Deflation
			4.4.1 Inflation
				4.4.1.1 Quantity Theory
				4.4.1.2 Demand Inflation Theory
				4.4.1.3 Cost Inflation Theory
			4.4.2 In the Current System Stable Money Does Not Exist
			4.4.3 Purchasing Power Depends on the Productivity of the National Economy
			4.4.4 Price Bubbles as Partial Inflation
			4.4.5 The Inflation-Deflation Paradox
			4.4.6 The Increase of All Prices Equals All Interest Payments
			4.4.7 Foreign Investments Do Not Change the Money Supply
			4.4.8 Heavy Deflation When the System Breaks Down
			4.4.9 Regular Financial Crises
		4.5 Interest Makes Growth in the Real Economy Mandatory (Microeconomic View)
		References
	Chapter 5: The Effect of Interest on the Money Supply, Demand and Growth
		5.1 Interest Makes Growth Possible (Macroeconomic View)
		5.2 Explanation of the Relationship Between Interest, GDP Growth and Inflation
			5.2.1 First Perspective: Interest Makes Deposits Grow
			5.2.2 Second Perspective: Interest Requires Banks to Grant Loans
			5.2.3 Interest Is a Reward for Parting with Liquidity
		5.3 Empirical Evidence and Causality
			5.3.1 Empirical Evidence
			5.3.2 Discussion
		5.4 Interest Destroys Fullarton’s Law of Reflux
		5.5 Central Banks Are Trend Followers, Not Trend Setters
			5.5.1 In the Long Run Interest Rates Tend to Go Down
			5.5.2 In the Current System: Central Banks Are Obliged to Print Money
			5.5.3 In the Current System: Central Banks Are Obliged to Lower Reserve Requirements over Time
		5.6 Our Money Is Not Neutral and Is Not Capital
			5.6.1 The Fairytale of Monetary Neutrality
			5.6.2 Money Is Not Capital
			5.6.3 Interest Is Not a Tax
			5.6.4 Our Monetary System Is Comparable to a Ponzi Scheme
			5.6.5 Clear Distinction Between Interest and Real Economic Profits
		5.7 The Growth Imperative Even Applies to Natural Resources
			5.7.1 The Tragedy-of-the-Commons Metaphor
			5.7.2 The Goose that Lays Golden Eggs
			5.7.3 Privatization Does Not Necessarily Avoid Unsustainable Resource Management
			5.7.4 Natural Resources in Open Access Regimes and the Role of Scale
			5.7.5 Worst Case Scenario: Open Access Combined with the Obligation to Grow
			5.7.6 Risks Are Consequently Underestimated
			5.7.7 Summary
		5.8 Discussion
			5.8.1 The Circular-Flow Argument
			5.8.2 The Inverted-Causality Argument
			5.8.3 Neglecting Compound Interest
			5.8.4 The Profit-Maximization Argument
			5.8.5 The Ambiguous-Role-of-Interest Argument
			5.8.6 Summary
		5.9 Conclusions
		References
	Chapter 6: Economic Growth in the Long Run Is Unsustainable
		6.1 What Is Sustainability?
			6.1.1 Four Lines of Thought
			6.1.2 Sustainability as Marketing Tool to Promote Growth
		6.2 We Are an Integral Part of Nature
			6.2.1 Living Within Limits Established by Ecosystems
			6.2.2 Three Defining Elements
			6.2.3 Evolution of the Concept of Sustainability
		6.3 Economic Activity and the Biosphere
			6.3.1 The Economy as a Sub-system of the Ecological System
			6.3.2 We Live on a Finite Planet
			6.3.3 We Cannot Create Something Out of Nothing
			6.3.4 The Nature of the Economic System Is Entropic
		6.4 There Is No Such Thing as a ‘Sustainable’ Growth
		6.5 Discussion
			6.5.1 Growth Models with Unrealistic Assumptions
			6.5.2 Growth Models with Unrealistic Production Functions
			6.5.3 Clarification: Economic ≠ Physical Values and Development ≠ Growth
			6.5.4 Environmental Kuznets Curve
			6.5.5 Circular Economy and Decarbonizing the Economy
		6.6 Conclusions
		References
	Chapter 7: Economic Growth or Unemployment
		7.1 The Force Behind Okun’s Law
		7.2 SDG No. 8 Tries to “Square the Circle”
		7.3 Discussion
			7.3.1 Divergence Between Savings and Investment as Cause of Unemployment?
			7.3.2 The Keynesian Economic Perpetual Motion Machine
			7.3.3 Is the “Keynesian Multiplier” Being Confused with the “Money Multiplier”?
			7.3.4 Empirical Evidence That the Keynesian Multiplier Does Not Exist
			7.3.5 Structural Deficiencies as Cause of Unemployment?
		7.4 Does Population Growth Require Economic Growth?
		References
Part III: Money and Inequality
	Chapter 8: Our Current Monetary System Produces Income Inequality
		8.1 Introduction
		8.2 Exponentially Growing Deposits and Debt
		8.3 In Perfect Competition Unjust Inequality Should Not Exist
			8.3.1 Everyone Is Supposed to Gain According to Their Effort
			8.3.2 The Money Lender Earns an Income Without Creating Value
			8.3.3 The Marginal Productivity of the Money Lender Is Zero
			8.3.4 No Pareto Efficiency
		8.4 Is the Economic Theory Wrong?
		References
	Chapter 9: Moral-Ethical Aspects of Interest-Induced Inequality
		9.1 The Perfect Mechanism for Wealth Redistribution (from the Poor to the Rich)
		9.2 Money Does Not Work, Nor Produce Offspring
		9.3 The Borrower Takes the Entrepreneurial Risk and Pays Twice
		9.4 Can Interest Even Be Considered Fraud?
		9.5 A Reward for the Sacrifice of Consumption, or for Improving Productivity?
		9.6 The Money Owners Should Thank the Borrower
			9.6.1 Lending Money Is Not a Service and Certainly Not a Product
			9.6.2 Interest as Opportunity Cost for Foregone Use
		9.7 Interest Can Be Seen as a Monopoly Rent
			9.7.1 A Monopoly Rent Is Inherently Unjust
			9.7.2 Interest Is Even Worse Than Regular Monopoly Rent
		9.8 Interest Is Comparable to Extortion
		9.9 Market Prices Are Not Always Fair
		9.10 Interest Contradicts All Theories of Justice
		9.11 Speculation
		9.12 The Prohibition of Interest in the Holy Scripture
			9.12.1 Interest Contradicts the Biblical Commandment to Love One another
			9.12.2 The Bible, Torah and Koran All Explicitly Prohibit Interest
			9.12.3 The Reinterpretation of Usury as Immoral High Interest
			9.12.4 Is Interest on Loans for Productive Investments Morally Justified?
		9.13 Did Aristotle and Thomas Aquinas Lack a Sound Capital Markets Theory?
		9.14 Conclusions
		References
Part IV: Natural Money as Solution
	Chapter 10: Gesell’s Solution
		10.1 Money That Circulates Naturally
			10.1.1 Interest as ‘Necessary Evil’?
			10.1.2 Gesell’s Solution: Natural Money
			10.1.3 Blood Must Flow Without the Need for Drugs
			10.1.4 Keynes and Fisher Praised Gesell’s Proposal
			10.1.5 How to Practically Implement Natural Money Today
		10.2 The Natural Money Banking System
			10.2.1 The Role of Banks: And Why Banks Would Profit
			10.2.2 Brokerage Commissions Are Not Interest
			10.2.3 Insurance Against Loan Defaults
			10.2.4 Private Equity Investments Remain Possible
			10.2.5 Risk-Free Profits from Investments Will No Longer Exist
			10.2.6 The Money Supply Automatically Adjusts to GDP Growth
			10.2.7 The Role of the Central Bank
			10.2.8 No Bank Runs
			10.2.9 No Speculation Against Free Money
		10.3 Discussion
			10.3.1 Critique of Keynes and Fisher
			10.3.2 Carrot or Stick: Does It Make a Difference?
			10.3.3 Would People Circumvent Natural Money Using Gold or Bitcoin?
			10.3.4 Would Natural Money Promote Growth or Increase Inflation?
			10.3.5 The Hoarding Fee Will Not Be Higher Than Today’s Inflation
			10.3.6 Are Negative Rates Unnatural?
			10.3.7 Natural Money Is Neutral Money
			10.3.8 Gesell Unites Neoclassical and Keynesian Interest Theories
		10.4 We Can Finally Approach “Perfect Competition”
			10.4.1 Small Is Beautiful
			10.4.2 Perfect Competition: No Longer a Theoretical Utopia
			10.4.3 The Role of the Government
			10.4.4 Perfect Competition Translates into ‘Perfect Solidarity’
			10.4.5 Competition Is Not Incompatible with Cooperation
			10.4.6 Competition Limits Selfishness
			10.4.7 Neighborly Love Would Render Competition Unnecessary
		10.5 A Natural Land Property Order
			10.5.1 Introduction
			10.5.2 The So-Called “Natural Dividend” Is a Monopoly Rent
			10.5.3 With Traditional Harvesting Methods Free Access Would Lead to Allocative Efficiency
			10.5.4 Distinction Between Man-Made Products and the Produce of Nature
			10.5.5 Free Access for Everyone to Natural Resources?
			10.5.6 Gesell’s Freiland: Equal Opportunities and Access to Plant and Harvest
			10.5.7 Not to Be Confused with Marxism
			10.5.8 The Natural Economic Order (Money and Land Reform Together)
			10.5.9 Money Reform Is Far More Important Than Land Reform
			10.5.10 Tax Reform Instead of Land-Property-Order Reform
			10.5.11 A Ray of Hope: Real Estate Tax Reform in Germany
			10.5.12 Summary
		10.6 Is the Natural Economic Order a Christian Economic Order?
			10.6.1 Gesell’s Natural Economic Order Is Truly Natural
			10.6.2 The Natural Economic Order and Holy Scripture
			10.6.3 Gesell’s Solution Instead of the Jubilee
			10.6.4 Holy Scripture Asks Us to Be Good Administrators of Nature
			10.6.5 Some Further Reflections
		References
	Chapter 11: Gesell’s Solution to Achieve the SDGs
		11.1 SDG 1 and 2 (No Poverty and Zero Hunger)
		11.2 SDGs 3, 4 and 6 (Good Health and Wellbeing, Quality Education, Clean Water and Sanitation)
		11.3 SDG 5 and 10 (Gender Equality and Reduced Inequalities)
			11.3.1 Existing Inequalities Are Being Exacerbated
			11.3.2 Gender Inequality
			11.3.3 Gesell’s Mütterrente: Another Extraordinary and Modern Idea
		11.4 SDG 7 (Affordable and Clean Energy)
		11.5 SDG 8 (Decent Work and Economic Growth)
			11.5.1 Economic Growth Cannot Be Sustainable
			11.5.2 Universal Basic Income
			11.5.3 Provision of Land for Small Scale Agriculture
		11.6 SDG 9 (Industry, Innovation and Infrastructure)
		11.7 SDG 11 (Sustainable Cities and Communities)
		11.8 SDG 12 (Responsible Consumption and Production)
		11.9 SDG 13, 14 and 15 (Climate Action, Life Below Water and Life On Land)
			11.9.1 We Must Stop Growing
			11.9.2 Modern Harvesting Technology Requires Further Regulations
			11.9.3 Restricting Access to Publicly Owned Natural Resources
			11.9.4 Restricting Access to Privately Owned Resources
		11.10 SDG 16 (Peace and Justice, Strong Institutions)
		11.11 SDG 17 (Partnerships for the Goals)
		References
	Chapter 12: How to Implement Gesell’s Solution in Today’s World
		12.1 Governmentally Imposed Hoarding Tax
			12.1.1 Pure E-money System
			12.1.2 Cash Cards for Anonymous Payments
			12.1.3 What About the Security of Such Cards?
		12.2 Effective Central Bank Negative Interest Rate Policy
			12.2.1 Gesell’s Hoarding Fee Is a Negative Interest Rate
			12.2.2 The Problem of the “Zero Lower Bound”
			12.2.3 Pure E-money System
			12.2.4 Cash Cards for Anonymous Payments
			12.2.5 Cash Cards and Stamp Scrip Money Working in Tandem
			12.2.6 The Eisler Proposal
			12.2.7 Decoupling Cash from Bank Deposits
		12.3 Some Further Reflections
			12.3.1 Stamp Scrip Has Advantages Over a Pure Electronic System
			12.3.2 Hoarding Fee Only for Demand Deposits
			12.3.3 How to Improve Confidence
			12.3.4 Gesell’s Proposal Is Still Not Properly Understood
			12.3.5 Outlook
		12.4 Discussion of Some Myths on Negative Rates
			12.4.1 Do Negative Interest Rates Expropriate Holders of Money?
			12.4.2 Do Negative Interest Rates Cheat Savers?
			12.4.3 Could Natural Money Cause Efficiency Losses?
			12.4.4 Could Natural Money Affect Productivity, and Thus Economic Growth and Unemployment?
			12.4.5 Could Natural Money Threaten Pensions and Retirement Plans?
			12.4.6 Could Natural Money Put the Stability of the Monetary System at Risk?
			12.4.7 Could Natural Money Cause ‘Capital’ Flight?
			12.4.8 Could Natural Money Cause a Loss of Confidence in Central Banks?
			12.4.9 Could Natural Money Cause a Shift into Gold and Cryptocurrencies?
			12.4.10 Could Natural Money Lead to the Surveillance State?
		References
	Chapter 13: Alternatives to Gesell’s Solution?
		13.1 “100% Money” and “Sovereign Money”
			13.1.1 An Old Idea in Vogue Again
			13.1.2 100% Money Can Avert Bank Runs
			13.1.3 The Problem Is Not Solved
			13.1.4 “100% Money” vs. “Sovereign Money”
			13.1.5 ‘True’ Sovereign Money
			13.1.6 Neither Full Reserve Banking, Nor True Sovereign Money Are Forms of “Positive” Money
			13.1.7 Summary
		13.2 Modern Monetary Theory (MMT)
			13.2.1 A Noble Objective
			13.2.2 Keynesianism Serves the Recipients of Interest
			13.2.3 A Dangerous Proximity to Marxism
		13.3 Marxism, Communism and Socialism
			13.3.1 Another Noble Objective
			13.3.2 Little Freedom and Heavy Welfare Losses for People
			13.3.3 The Origin of the Conflation of Money with Capital
			13.3.4 A Most Efficient “Smoke Grenade”
			13.3.5 Communism Strengthens the Current Monetary System
			13.3.6 Old Class Differences Are Being Replaced by New Ones
			13.3.7 We Are the Market
			13.3.8 Communism Is Perfect Monopolization
			13.3.9 Communism Is Governmentally Organized Robbery
			13.3.10 The Most Serious Flaw of Communism
			13.3.11 Communism Is Even More Unnatural Than the Interest Economy
		13.4 Gold Standard or Other “Backed Money”
			13.4.1 Gold Standard
			13.4.2 Tangible Wealth-Backed Money
			13.4.3 Is a Tangible Wealth-Backed Currency Not Natural Currency?
			13.4.4 The Impossible Circular Reasoning
			13.4.5 The “Rentenmark” Was Not a Long-Term Solution Either
			13.4.6 Backed Currency with Hoarding Fee?
			13.4.7 Conclusion
		13.5 Inflation Adjusted Accounting Units Like the Chilean UF
		13.6 Time Banks and Time Vouchers
			13.6.1 Time as Currency?
			13.6.2 Does It Make a Difference What We Call the Bills?
			13.6.3 Only Non-storable Time-Based Money Is a True Alternative
			13.6.4 Time-Based Money Is Not “Positive” Money
			13.6.5 Some Problems Associated with Time-Based Money
		13.7 Social or Local Money
			13.7.1 Promoting Local Commerce
			13.7.2 The Extraordinary Example of Banco Palmas
			13.7.3 Only Local Money with a Hoarding Fee Is Natural Money
			13.7.4 Argentina’s Patacones & Co.
			13.7.5 Some Legal Issues
			13.7.6 Outlook: Confederation of Local Currencies
		13.8 Credit Cooperatives and Trustee Savings Banks
			13.8.1 The Idea Behind Credit Cooperatives
			13.8.2 Evaluation
			13.8.3 The JAK Cooperative: An Extraordinary Example
			13.8.4 Outlook
		13.9 Cryptocurrencies
			13.9.1 What Is Bitcoin?
			13.9.2 Blockchain Currency as Legal Tender?
			13.9.3 Evaluation
			13.9.4 The Solution: Crypto Currency with Hoarding Fee
			13.9.5 What About ‘Stablecoins’?
			13.9.6 High Energy Consumption
		13.10 Prohibition of Interest/Islamic Banking
			13.10.1 What About a Simple Ban on Interest?
			13.10.2 Avoiding Hoarding Fees by Saving Abroad?
			13.10.3 Prohibitions Are Not Necessarily a Constraint on Freedom
			13.10.4 Islamic Banking
			13.10.5 A Ban on Interest Compared with Gesell’s Natural Money
		13.11 Ethical Banking and Microcredits
			13.11.1 “Ethical” Banking
			13.11.2 Microcredits
		13.12 Bailouts, “Bad Banks” & Co.
			13.12.1 Bailouts and Bad Banks
			13.12.2 Economic Recovery Programs
			13.12.3 Quantitative Easing
			13.12.4 European Stability Mechanism and Other Rescue Funds
		13.13 Tobin Tax and Austerity
			13.13.1 Tobin Tax
			13.13.2 Austerity
		13.14 Degrowth, Decarbonize and Circular Economy
			13.14.1 Degrowth and Less Consumerism
			13.14.2 Decarbonize and Circular Economy
		13.15 Doughnut Economy, Gemeinwohl-Ökonomie and Buen vivir
			13.15.1 Doughnut Economy
			13.15.2 Gemeinwohl-Ökonomie
			13.15.3 Buen vivir/Bem viver
			13.15.4 Recapitulation
		13.16 Overview
		References
	Chapter 14: Experiences with Gesell’s Solution in the Past
		14.1 Introduction
		14.2 Natural Money Experiments
			14.2.1 Schwanenkirchen/Wära Exchange Association
			14.2.2 Wörgl
		14.3 Natural Land Order Experiments
		14.4 Bracteates in the Middle Age
		References
Part V: Outlook and Final Considerations
	Chapter 15: Towards Development at Human Scale
		15.1 The Human-Scale-Development Approach
		15.2 The Necessary Market Structure
		15.3 Development at Human Scale and GDP Growth
		15.4 Growth and Inequality
		15.5 From Chrematistics Back to Oikonomia
		References
	Chapter 16: Economic Resilience in the Face of External Shocks
		16.1 Natural Money for a Sustainable Monetary System
			16.1.1 Exponential Money Supply Growth, Debt and Interest
			16.1.2 Subprime Lending Becomes Inevitable
			16.1.3 Are the Subprime and Euro Crises Different?
			16.1.4 All Financial Crises Follow the Same Pattern
			16.1.5 Do ‘Kondratieff Waves’ Correspond to the Cycles of Our Financial System?
			16.1.6 The Classic Confusion of Causes with Symptoms
		16.2 Natural Disasters and Wars Benefit the Financial Sector
			16.2.1 Natural Disasters: The Case of 2010 Chilean Earthquake
			16.2.2 Wars
			16.2.3 GDP as Indicator for Development?
		16.3 A Negative Outlook
			16.3.1 The Global Financial System Again on the Verge of a Meltdown in 2019
			16.3.2 The Covid-19 Pandemic Is Playing into the Hands of the Banking Sector
			16.3.3 Economic Stimulus Packages Instead of Bailouts
		16.4 A Positive Outlook
			16.4.1 A Historic Opportunity for a New System
			16.4.2 Taking Advantage of the Crisis
			16.4.3 The “Carrot-Method” Does Not Work in the Long Run
			16.4.4 Economic Resilience in the Face of Externals Shocks
		References
	Chapter 17: Addendum: Some Final Considerations
		17.1 Deviation from Nature: The Cause of Many Diseases
			17.1.1 A Personal Experience
			17.1.2 Intoxication Is Deviation from Nature
			17.1.3 Deviation from Nature: The Cause of Many Diseases
			17.1.4 Can We Improve Nature?
		17.2 A Natural Economy Is a Healthy Economy
			17.2.1 From a Healthy Life to a Healthy Economy
			17.2.2 A Healthy Economy Is Consistent with Holy Scripture
			17.2.3 Without a Sustainable Financial System, a Sustainable Future Is Not Possible
			17.2.4 No More Economics of Accumulation
		17.3 Towards an Economy of Neighborly Love
			17.3.1 Love: The Transcendental Meaning of Life
			17.3.2 The Great Puzzle of Love
			17.3.3 Pareto Efficiency and True Happiness
			17.3.4 Freedom, Dignity and Justice
			17.3.5 Recapitulation
		17.4 Concluding Remarks
		References