Money and Credit in 2050

(This is a summary of an essay I wrote in 2000!) It still seems relevant. The full document is here (pdf 36.8kb).

By 2050 money in its current form as non-specific value will have been replaced by credits for specific future goods and services. These credits will be traded in a sophisticated barter network. This is the only complete solution to the problems created by money which have plagued the global economy in the 20th century. The partial solutions offered by Marx, Keynes and Friedman have done as much harm as good. Because money represents a claim on future production of goods and services, but these goods and services are not specified in transactions, physical limits to their future availability and use are often not reflected in money prices. This is responsible for the phenomenon of national money supplies growing faster than national production and the asset price inflation seen in many parts of the global economy. The apparently limitless nature of the pool of money in the global economy also means that major distortions in distribution often go unrecognised. The solution of using credits for specific future production is a feasible one using anticipated advances in information and communication technology. Pointers to the future can be seen in the proposed Kyoto emissions trading scheme, and in the expansion of barter networks. Banks, or their equivalents, will continue to offer credit for development but will assess the risks and benefits on a much broader basis than pure profit and loss. The proposed credit system will produce significant improvements in the ability of market mechanisms to value environmental and social aspects of production and supply. Macroeconomic stability will be enhanced by the removal of uncertainty over money effects in future transactions and political responses to economic shocks will be improved by greater public understanding of their real causes and effects.