Transitioning to a New Financial System (Play it again Sam!)

Many/Most of us are not economists. And really, we avoid the topic of ‘economy’ because it is generally considered to be difficult. We cannot avoid it any longer, so here is Nico’s essay again. This is not supposed to be a training course at all, but certain aspects all of us will need to understaind going forward.

“This essay was created with help from DeepSeek and with input from Colin Maxwell’s thinking. The goal is to create more awareness and address issues in a clear and understandable way. It is a journey and not a set account, think along, participate. The ball is in people’s court.”

Replacing Debt-Based Money with Sound Money and Fair Exchange

The current financial system is fundamentally flawed. It is built on debt-based money creation, where private banks generate money out of nothing and charge interest, forcing endless economic growth in a world of finite resources. This system leads to wealth inequality, financial instability, and environmental destruction.

To fix this, we must transition to a new financial system based on:

• Sound money (not created as debt).
• Elimination or radical reform of interest.
• Replacement of all taxation with a Financial Transaction Tax (FTT).
• A shift in mindset: money as a means of exchange, not a store of wealth.

1. The Problems of the Current Financial System

A. Debt-Based Money Creation

• Private banks create ~97% of money as loans (Bank of England, 2014).
• This money is backed by debt + interest, forcing perpetual growth.
• Consequence: The economy must keep expanding to repay loans, leading to boom-bust cycles.

B. The Interest Problem

• Interest drives wealth inequality (the rich earn from interest, the poor pay it).
• It requires infinite growth on a finite planet (ecological unsustainability).
• Leads to financialization (making money from money, not real value).

C. Money as a Goal, Not a Tool

• Hoarding mentality: The wealthy accumulate money instead of circulating it.
• Speculation over primary necessities: Essential goods like food, housing, and healthcare become financialized, traded as commodities rather than guaranteed rights. Hedge funds speculate on grain prices while millions starve; private equity buys up hospitals and cuts staff for profits.
• Finance dominates real value creation: Stock buybacks exceed R&D spending; derivatives trading dwarfs productive investment.

2. The New Financial System: Key Reforms

A. Sovereign Money Creation (Ending Private Bank Money Creation)

• Full Reserve Banking: Banks can only lend existing money, not create it.
• State-issued money: Governments create debt-free money for public spending (Modern Monetary Theory, MMT).
• Example: The Chicago Plan (1930s) proposed this to prevent bank runs.

B. Replacing Interest with Alternative Models

• Islamic Finance Principles:
  • Profit-sharing (Mudaraba) instead of interest.
  • Asset-backed financing (Murabaha).
• Public Banking: State banks offering interest-free credit (e.g., Bank of North Dakota).
• Negative Interest on Hoarded Money (Silvio Gesell’s idea to discourage accumulation).

C. Replacing All Taxation with a Financial Transaction Tax (FTT)

• A single, progressive FTT (0.1%-1%) on all financial transactions: stocks, bonds, derivatives, forex, crypto.
  • Replaces income tax, VAT, corporate tax, simplifying the system and reducing bureaucracy.
  • Targets speculation: High-frequency trading (HFT) and derivatives would bear the heaviest burden.
  • Funds public services: Revenue from FTT replaces lost tax income, funding healthcare, education, and infrastructure.
• Advantages:
  • Reduces wealth inequality: The top 1% conducts 90% of speculative trades (IMF data).
  • Stabilizes markets: Discourages short-term gambling (e.g., 2008 crisis).
  • Encourages productive investment: Long-term holdings are taxed less than millisecond trades.
• Historical Precedent:
  • The UK’s stamp duty (0.5% on shares) reduced volatility without harming growth.
  • Sweden’s 1980s FTT (later repealed due to globalization pressures, showing the need for global coordination).

D. Complementary & Local Currencies

• LETS (Local Exchange Trading Systems): Community-based, interest-free exchange.
• Cryptocurrencies with Fixed Supply (e.g., Bitcoin, but with better energy efficiency).

3. Obstacles to Transition & How to Overcome Them

A. Resistance from Financial Elites

• Problem: Banks, hedge funds, and corporations profit from speculation and debt-based money.
• Solution:
  • Mass movements (e.g., Occupy Wall Street with clear demands).
  • Whistleblowing (expose how speculation harms food/healthcare access).

B. Political Capture by Banks

• Problem: Politicians depend on financiers for funding.
• Solution:
  • Public election financing (ban private donations).
  • Citizen assemblies to draft monetary reforms.

C. Fear of Economic Shock

• Problem: Sudden FTT implementation could trigger capital flight.
• Solution:
  • Gradual phase-in: Start with a 0.1% FTT, then scale up.
  • International cooperation: G20-wide FTT to prevent tax havens.

D. Public Misunderstanding

• Problem: Many believe “taxes are inevitable” and don’t question money creation.
• Solution:
  • Education: Explain how FTT could abolish income tax.
  • Media campaigns: Compare speculation taxes to Robin Hood policies.

4. The Psychological Shift: From Hoarding to Circulating Money

The deepest issue is human behavior:

• Greed vs. Need: The current system rewards accumulation, not circulation.
• Solution:
  • Demurrage currency: Money loses value if hoarded (encourages spending).
  • Basic Income: Reduces scarcity mindset.
  • Ethical finance: Praise circulating wealth, not hoarding (e.g., Islamic charity principles).

Conclusion: A Realistic Path Forward

The transition requires:

1. Ending private money creation.
2. Abolishing interest with profit-sharing models.
3. Replacing all taxes with FTT; punishing speculation, not labor.
4. Cultural change: Money as a tool for exchange, not a god to worship.

The obstacles are powerful but not invincible. History shows that unjust systems collapse when enough people awaken and build alternatives.

Creating awareness in the street

“Copy, paste and share.”

A Fairer Money System Is Possible – Here’s How We Get There

Right now, our money system is broken. A handful of big banks create money out of nothing, charge us interest on it, and force the economy to grow endlessly, even though we live on a planet with limited resources. This makes rich bankers and speculators even richer while ordinary people struggle with debt, unaffordable housing, and rising food prices. But it doesn’t have to be this way. We can build a better system, one where money works for everyone, not just the wealthy few.

What’s Wrong With the Current System?

Today, almost all money is created as debt. When banks make loans, they don’t lend out existing money, they create new money out of thin air and charge interest on it. This means our entire economy runs on borrowed money, forcing us to keep growing just to pay back the interest. Meanwhile, Wall Street speculators gamble on food prices, housing, and even healthcare, turning basic human needs into profit machines while millions suffer.

The system is designed to make the rich richer. The more money you have, the more you earn from interest and investments, without doing any real work. Meanwhile, workers pay taxes on their wages while billionaires exploit loopholes. It’s not fair, and it’s not sustainable.

How Do We Fix It?

We need three key changes:

1. Stop Banks from Creating MoneyMoney should be created by governments, not private banks. That way, we can fund schools, hospitals, and green energy without drowning in debt.
2. Replace Interest with Fair ExchangeInstead of charging interest (which makes the poor poorer), banks could share profits or lend without interest for essential needs like housing and small businesses.
3. Tax Speculation, Not WorkA tiny tax on stock trades (just 0.1%) could replace income tax and VAT. Why tax workers when we can tax billionaires who gamble on the stock market?

What’s Stopping Us?

The biggest obstacle is the banks and billionaires who profit from the current system. They lobby politicians, control the media, and make sure nothing changes. But history shows that when enough people demand reform, change happens.

What Can You Do?

• Educate yourself and others – Most people don’t even know banks create money. Spread the word.
• Support ethical banks – Move your money to credit unions or public banks that don’t exploit debt.
• Demand political action – Vote for leaders who challenge the banking system and support fair taxes on speculation.

A Better Future Is Possible

We don’t have to accept a system where money rules over people. If we work together, we can create an economy where money serves us, not the other way around. The first step is realizing the problem. The next step is taking action.

Will you join the movement?

The Coming Financial Collapse

“It is closer than we think.”

Warning Signs and How to Prepare

The Western financial system is showing dangerous cracks. While no one can predict exactly when a full collapse will happen, the warning signs are clear and growing worse. Here’s what to watch for, and how to protect yourself when the system fails.

Signs the Financial System Is Failing

1. Bank Runs and Bail-Ins
   • When people lose trust in banks, they withdraw cash en masse (like with Silicon Valley Bank in 2023).
   • Governments may impose “bail-ins”, stealing depositors’ money to “save” failing banks (as happened in Cyprus, 2013).
2. Hyperinflation or Deflation
   • Hyperinflation: When money printing goes wild (like in Weimar Germany or Zimbabwe), prices skyrocket, and savings become worthless.
   • Deflation: Banks stop lending, businesses collapse, and unemployment soars (like the 1930s Depression).
3. Stock Market Crashes & Bond Meltdowns
   • Stocks and bonds are in a historic bubble. When they crash, pensions and 401(k)s will evaporate.
   • U.S. Treasury bonds (the “safest” asset) are losing value as faith in government debt collapses.
4. Currency Wars & De-Dollarization
   • Countries like China, Russia, and Saudi Arabia are dumping the U.S. dollar.
   • If the dollar loses reserve status, America’s debt-based economy implodes.
5. Government Crackdowns on Cash & Crypto
   • CBDCs (Central Bank Digital Currencies) will replace cash, allowing total financial control.
   • They will freeze accounts, impose spending limits, and track every transaction.

How to Prepare Before It Happens

1. Get Your Money Out of Banks

• Hold physical cash (in small bills) in case ATMs shut down.
• Use credit unions or local banks (less likely to fail than mega-banks like JPMorgan).
• Buy gold & silver (real money that can’t be printed away).

2. Protect Your Income & Assets

• Own hard assets: Land, farmland, tools, and anything useful in a crisis.
• Learn barter skills: Repair, medical, farming, things people will trade for.
• Diversify income: Side hustles that don’t rely on the system (e.g., gardening, handyman work).

3. Prepare for Supply Chain Collapse

• Stockpile food, water filters, medicine (supermarkets have just 3 days of food).
• Grow your own food (even a small garden helps).
• Have backup power (solar panels, generators).

4. Expect Government Lies & Blame Games

• Politicians will blame “greedy corporations,” “foreign enemies,” or “conspiracy theorists.”
• They will impose capital controls (limits on withdrawals, forced asset seizures).
• Solution: Stay under the radar. Don’t trust mainstream media, seek independent news.

5. Build a Local Network

• In a collapse, community matters more than money.
• Trade skills, protect each other, and avoid dependence on the state.

What Happens After the Collapse?

• A new system will replace the old one, likely a CBDC dictatorship or a barter/parallel economy.
• Those prepared will survive; those dependent on the system will suffer.

The collapse is not a question of if, but when. The elites know it’s coming, they’re preparing (buying bunkers, farmland, and gold).

“This essay invites comments, additions, corrections and reposts.”

By Nico Cost