THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

just as today's decision of which national currency is to be used for an
international payment.
Finally, the store of value function would not be played by the
GRC. It could be played by instruments in conventional national
currencies, or by new specialised financial products which would
create liquidity, from investments in productive assets.
This functional specialisation shows how the ORC plays a role
complementary to the conventional national currencies.
The behaviour dynamic that a GRC induces is similar to the 'goad'
aspects of inflation while avoiding its 'bed' ones. Economists have
noted that a moderate amount of inflation can actually have a good
impact on the economy. For instance, the 1980s inflation in the US
provoked a negative net return on rued income instruments, thereby
encouraging investment in productive projects. However, inflation
also implies regressive effects such as the erosion of all price
agreements and the redistribution of wealth from the financially
unsophisticated majority to a sophisticated minority.
The demurrage fees of the GRC therefore obtain the positive effects
of inflation, while avoiding its negative ones.
Fisher's classical velocity of money equation provides another way
to illustrate the impact of the GRC. T = Sum (PG) = QV
(where T = total economic exchanges; P = prices; G = goods and
services
exchanged; Q= quantity of money end V = velocity of money
circulation).
For a given quantity of money in circulation (a given Q), the
demurrage feature of the GRC increases V. To the extent that the