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

Revenue' in determining the demand for money). The fact that the
quantity of Terra in circulation would be counter-cyclical to me
business cycle would therefore tend to counteract the pro-cyclical
nature of the conventional money system.
In summary, the introduction of a GRC would tend automatically
to dampen the business cycle by providing additional monetary
liquidity in counter-cycle with the business cycle relating to the
conventional national currencies.
Theoretical and practical soundness
The box on 'Economic tech talk' synthesises some key effects of the
Terra for those who prefer a purely economic language.
Conceptually, the Terra is the combination of two ideas: a currency
backed by a basket of raw materials which has been proposed by
many top economists of every generation, including the
contemporary Economic Nobel Prize - winner Jan Tinbergen on the
one side; and sustainability fees as originally proposed by Silvio
Gesell under the name of demurrage charges on the other.
This second idea demurrage charge on currency - was formally
endorsed by no less an authority than John Maynard Keynes. He
claimed that demurrage not only makes sense from a theoretical
viewpoint, but is actually preferably to our normal currencies.
Chapter 27 of Keynes's principal work, the General Theory of
Employment, Interest and Money explicitly states that: 'Those reformers,
who look for a remedy by creating artificial carrying cost for money
through the device of requiring legal-tender currency to be
periodically stamped at a prescribed cost in order to retain its quality
as money, have been on the right track, and the practical value of
their proposal deserves consideration.'