Improving the Australian Financial System

Kevin Cox
3 min readDec 18, 2022


The Australian Financial system has difficulties. House prices are continuing to increase. Levels of debt are at record highs. Some people are hungry, and homelessness rises while the disparity between the rich and the poor grows. Wage increases have dropped below inflation, and productivity has fallen while company profits and exports are at record levels. One reason is the drop in Capital productivity caused by a slowdown in the movement of investment Capital as wealth remains stationary in overpriced assets and excessive debt.

The cause of the slowdown in money movement is the increase in unearned income and inefficient Capital movement.

One solution to both issues is for buyers and investors to exchange Community Capital when paying for products.

The flow chart on the left shows the transfer of Community Capital from one investor to another.

The flow chart on the right shows the transfer of Regular Capital from buyers to investors. With Regular Capital, a transfer might occur in the future through Capital Markets, but it rarely transfers to those who cannot participate in Capital Markets.

Moving Community Capital at the time of payment means the buyer of a product buys old Capital plus the product, while investors receive a return on Capital plus new Capital. This creates a two-way or circular flow of Community Capital between Community members.

The Emergent Properties of Community Capital

  • Community Capital moves at least double the rate of Regular Capital
  • Capital remains in the Community.
  • The cost of operating Capital Markets is removed, and the cost of production determines the value of Capital.
  • Within a Community, asset prices remain the same unless there is a collective decision by the Community.
  • Money no longer generates more money.
  • Investments tend to reduce prices rather than increase them.
  • We can choose multiple productivity measures rather than relying mainly on the money returned on investment.
  • The minimum amount of Capital is needed to build a given asset.
  • Every person in a Community acquires Capital as they pay for products.
  • Members can sell or buy Capital from another member at any time at a known price.
  • Capital circulates within the Community leading to a Circular Economy.
  • The distribution of Capital trends away from a Zipf distribution to a Normal Distribution.

A normal distribution of Capital leads to positive social outcomes. Individuals become more trusting and cooperative, which leads to greater cooperation and production.


Changing accounting to exchange Capital with product payment leads to productivity improvements. The accounting change is simple, low cost, and incremental as Community Capital coexists with Regular Capital.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income by profiting from savings nor increasing prices.