Richard Murphy says:
April 16 2016 at 2:15 pm
We need the Bancor
John Maynard Keynes proposed an explanation for the ineffectiveness of monetary policy to stem the depression, as well as a non-monetary interpretation of the depression, and finally an alternative to a monetary policy for meeting the depression. Keynes believed that in times of heavy unemployment, interest rates could not be lowered by monetary policies. The ability for capital to move between countries seeking the highest interest rate frustrated Keynesian policies. By closer government control of international trade and the movement of funds, Keynesian policy would be more effective in stimulating individual economies.
Bancor would not be an international currency. It would rather be a unit of account used to track international flows of assets and liabilities. Gold could be exchanged for bancors, but bancors could not be exchanged for gold. Individuals could not hold or trade in bancor. All international trade would be valued and cleared in bancor. Surplus countries with excess bancor assets and deficit countries with excess bancor liabilities would both be charged to provide symmetrical incentives on them to take action to restore balanced trade.
Recall, this is the same bloke, the Murphatollah, who insists that we can simply use monetary policy, that People’s QE, to solve that problem of stimulus.
It’s not so much that either idea is mad in isolation it’s that you’ve got to be fucking crazy to believe in both.