Democratic Dollars mean that everyone has equal access to and receives the same value from each dollar they deposit or borrow from a bank. Today’s financial world is heavily skewed in favour of the already wealthy, who pay less for each dollar and get greater value from each dollar. Democratic dollars level the playing field so everyone pays a dollar to get a dollar and gets a dollar value for each dollar spent.
Banks are the guardians, creators, and movers of money for the community through the government or entity that authorises the issue of new money. Today, the banks issue new money through loans, store and transfer it through trading and saving accounts, and control money in ways that heavily favour the rich and themselves.
Banks charge different rates to different entities based on their existing wealth and/or influence. The wealthier, the less they pay. The poorer, the higher the fees charged by the banks. For example, a billionaire can transfer billions without cost, while banks charge various fees for small transactions.
On loans, High Net Worth Individuals and major corporations have “commercial in confidence” arrangements to reduce or eliminate the cost of loans and sometimes even the cost of money. In contrast, most individual, small business and government loans have two interest payments. One is called a capital gain to the bank and shareholders; the other is called interest and fees.
All the profit from the loans used to purchase or build assets goes to the shareholders and owners of capital. Profit is the transfer of wealth from consumers to owners. Profit does not create more money or wealth.
We can change the system by changing how we introduce money into society. Bank loans will still exist, but they will use existing money. Owners will still exist, but everyone can become an owner by ensuring that consumers buy equity at the same time they buy goods and services.
This will result in an economy where the cost of the financial sector will dramatically reduce its overhead, and new wealth will be distributed across the population instead of at least 80% going to the top 1%. Inflation will be a thing of the past; everyone will be employed if they wish but will have the alternative enjoyed by the wealthy of not having to work in unfulfilling jobs. Importantly, funds will become available to address the pressing issues of climate change and environmental degradation.
Fossil Fuel Companies Take Advantage of Undemocratic Money
Fossil fuel companies use banks’ undemocratic money rules to their advantage. They do not pay the banks the extra interest payment of a capital gain. Instead, they work with the bank and arrange the financing so that they don’t pay any interest. They claim depreciation of the assets they use to extract the oil, gas or coal as a cost to reduce the tax they pay while charging buyers to make up for the depreciation, and they claim exploration expenses as a tax deduction. The finance and tax rules are structured so that the oil and gas companies sell oil and gas for very little or no payments to the Australian people.
It is no accident that fossil fuel companies and banks are amongst the largest donors to political parties, either directly or via the companies and individuals who benefit from undemocratic money.
What You Can Do.
Individuals can act in several ways. The first is to obtain loans that banks call “interest-only” or what families call mum and dad loans. An interest-only loan is what all loans should be. An interest only means that the interest fee is paid and the capital is paid back, but there is no capitalisation of interest, creating unearned income. It is how most mum and dad loans are structured.
In the name of competition, banks can change the rules on the cost and value of a dollar depending on the customer’s wealth. They charge an unjustified capital gain by increasing the loan size by the interest owed without giving the borrower the money from the loan extension. They extend the loan by claiming that interest is part of the original loan, depending on the customer’s wealth.
Individuals should agitate for their super funds to be available to them or others as interest-only loans. This would force the banks to stop charging an unnecessary capital gain.
Write to all your political representatives, asking them to legislate to stop banks from using different rules for different customers and to treat all electronic money like cash, which means it costs the same no matter who purchases it and has the same value no matter who uses it.
What Communities Can Do
Banks have shown they cannot be trusted to introduce new money into the economy. They are unlikely to change their ways unless forced to, as this has proven to be the tool of choice for most colonists. The colonists of today are the super-wealthy, and the people they colonise are those in their communities with less money.
Communities can decolonise their communities one loan at a time. Communities do not have to introduce new money into their communities with loans. With government agreement, communities can band together and have the privilege that banks now have of creating new money.
The communities must use the funds to build or buy assets, and as community members pay for the use of the assets, 50% of the payment becomes a share of the asset. The other 50% pays for operating and maintaining the asset. People who own shares sell 10% of their shares each year and separately receive 5% in new shares. The 5% can vary as it measures the yearly productivity improvement or the increase in real wealth. This can be reduced as the productivity improvements become harder to find.
Governments supplying the new money, which costs them nothing to issue, receive shares and must sell 10% yearly. Half the money they receive replaces taxation on producing and selling goods and services. Community assets are financed and paid for in this way, removing the cost of capital. The approach is called a Permanent Capital Market.
Banks can continue to operate as they currently do but are relieved of the responsibility of creating new money. That responsibility now goes to community groups, including state, federal, and local governments and community groups that agree to keep the money democratic.
Any individual in a community group, including governments, forfeits their right to participate in new money communities if they pervert the idea of democratic money. Such individuals have to operate in the world of existing money.
Emergent Properties of Democratic Money
Across the world, we see extraordinary increases in the value of some companies. With democratic money, such extraordinary increases should disappear. For example, the share valuation of the CBA has increased by 240 times since it was floated in 1991. It has increased by 40% or 75 billion dollars in the last year alone. In the previous financial year, it is estimated that it collected about 45 billion in capital gains from double interest and fee payments. If the Bank stops collecting this amount, its operating profits will remain the same or even increase, and the extraordinary increase in valuation will halt. It will drop to reflect its actual profit from interest and fees.
In the 1960s, the increase in wealth was spread evenly across society. In 2020, 90% of the increase in wealth went to the wealthiest 10%, with most of that going to the top 1%.
With democratic money
- Increases in wealth will spread across society.
- The cost of purchasing a home will be halved, and everyone can become a part owner of their residence.
- If people want to rent, then rents will be halved.
- Productivity will increase to at least 5% yearly without inflation.
- Public assets like roads, airports, water and sewerage systems, the electricity grid, hospitals, etc., will all become lower-cost with better service.
- Most companies, including banks, will become part-owned by their customers, and wealth disparities will decrease as customers become capitalists when they purchase goods and services.
- Competition and innovation will increase, but only in ways that produce the same or new goods and services for less cost—not in a company's profit.
- Vast amounts of existing capital will become available to address the challenges of the increase in global temperatures and other human-created changes made to the planet.
Summary
Democratic Dollars turn electronic money into cash, where each dollar deposited or borrowed has the same value and cost for everyone. This removes the financial advantages currently enjoyed by the wealthy. Today’s banking system disproportionately benefits the wealthy through lower fees, exclusive financial arrangements, and capital gain practices while burdening individuals and smaller entities with higher costs and double interest payments.
By adopting Democratic Dollars, societies will create fairer financial systems, increase competition and innovation, and address wealth inequality. Individuals and communities can ask their politicians to set economic rules to allow permanent capital markets as a competitive alternative to existing capital markets and to introduce new money into communities.
