Economists have difficulty predicting the future even though humans construct, design, and control economies. In Australia, each month, we have the unedifying sight of the Reserve Bank members sitting around a table, looking at various indicators, setting the interest rate and crossing their fingers that they have made the right guess.
They have to do this because the creation of fiat money is unjust and unfair. It is unjust and unfair because lenders keep all the profit from creating money, whereas the profit should be shared with borrowers. Most of the profit should go to borrowers as they take most of the risk and do most of the work to create money.
The way to do this is remarkably simple, and the Reserve Bank could do it with a pen stroke. The Reserve Bank should keep the interest rate fixed, and target zero inflation by requiring Banks to share the interest paid with the borrower. The Bank could specify that different loans share more or less depending on the risk. If it is high risk (high interest), most should come off the amount owing.
This is fair and reduces the risk of the loan not being repaid because the borrower owes the money for less time.
The same principle can apply to all increases in Capital. If a business makes a high profit or is in a regulated industry with guaranteed income, then most of the profit should go back to the customers as discounts on products or shares in the Company.
Sharing profits from all business activities is estimated to double the productivity of the financial system, meaning we need less money to make more investments.
