“Monetisation is the term used to describe turning an object, goods, service or asset into money. It usually refers to currency — i.e. metals made into coins and the printing of banknotes — but companies are increasingly looking to turn assets into sources of revenue, and websites can also be monetised” Capital.com
Monetisation turns assets into money where the money itself earns more money independent of the assets from which it came. The financial system organises and distributes money created by monetisation and the operation of the financial system incurs a cost on society. The cost is approximately the money generated by money such as interest.
We monetise assets as a way to transfer ownership of assets over time. Another reason is to make assets, that have a value, become available as money for investment without having to sell the asset.
We can remove the cost of monetisation by removing the need to monetise assets. Instead of turning an asset into money we can track the use of the asset. Tracking allows us to share the ownership and the profits and losses between the buyer and seller. Instead of turning an asset into money and giving the money an existence independent of the asset, we transfer the ownership of the asset incrementally between the buyer and seller. By not monetising the asset, we save the interest and capital gains costs extracted by the financial system. With modern communications, the cost of tracking is a fraction of the cost of the financial system.
One way of removing the need for monetisation is to use Flexible Payments governed with not-for-profit cooperatives. In not-for-profit cooperatives, buyers and sellers join together as members to transfer specific assets over time. The members ensure savers of money get a fair return on their money, and buyer members get lower prices for goods and services. An example organisation is Sociocratic HOuse FUnding (SHOFU) a tracking system that can provide affordable housing for all members of society.
Monetisation causes disparities in wealth and distortions in the distribution of assets. It means that those who have monetary wealth charge rent on money to those who do not have money. Those who rent money do not willingly share the profits that come from renting money. Society attempts to overcome these distortions through taxation of profits, but increasingly, tax is avoided or minimised by those with money. While monetisation can be fair and equitable, in practice it proves to be unfair and inequitable. Providing a cheaper alternative to the financial system will mean the financial system will reform itself to remain competitive.
