Excerpt from the book »
Gradido – Natural Economy of Life«
How can it succeed?
“Tell me one thing, Grandpa. All that is
logical and simple for us today and we know that the transition was peaceful.
But what was it like in the waste age? At that time people thought quite
differently from us. How did it succeed?”
“It was hardly to be expected that the entire
world would introduce the new system all at once. Neither would a single
country have been able to get out of the economic entwinements all on its own.
Ways had to be found for individual countries to begin without risk within the
existing system.”
“Were they able to introduce the Natural
Economy of Life step by step, restructure their economies and motivate other
countries to follow their example?“
“That was the objective but it wasn’t quite so
simple. All the nations were highly in debt with the debts increasing from year
to year. The countries had to spend more money than they earned. Some people
thought the system of interest was to blame but that was only half the truth.”
“So what was the reason for it?”
An error in reasoning in
the tax system becomes a chance.
“We found a crucial error in reasoning in the
previous system that had been overlooked by economists: it was always cash
flows that were taxed. Whether if was income tax, VAT or excise duty, the state
was always biting the hand that fed it.”
“It’s clear that taxes on cash flows put a
brake on business transactions.”
“Today we know that, Pia. But a lot of
economists couldn’t see the wood for the trees. And what did the countries that
spent more than they earned and got into greater and greater debt do? They
tried to cut their expenditure and increase their earnings. They reduced state
benefits and increased taxes. What do you think the result was?”
“Did it improve the national budget?”
“Only for a short time, if at all. It always
deteriorated in the long term. There are simple reasons for that.”
“What are they?”
“Higher taxes lead to increased prices and
people bought less. They tried to make everything themselves or help themselves
by moonlighting. Industry produced abroad. In any case the economy was harmed
and jobs were lost. The government had less revenue and more expenditure on
welfare benefits.”
“And reduced government services also brought
only disadvantages: industry had fewer orders, resulting in less tax revenue.
Might it have been better to lower taxes?”
“Tax cuts wouldn’t have reversed the
development. They would only have led to even lower government revenue in the
short term, a classic dilemma.”
“And then your big chance came?”
“Yes, it did. That was the beginning of the
Natural Economy of Life, which assures the national budget without taxing cash
flows. We developed a plan to phase in the Natural Economy of Life.”
“A step-by-step introduction?”
Start small...
“Our challenge consisted in developing a
project that observed the laws of that time and was able to begin on a small
scale. It was supposed to solve acute economic problems on a regional level or
at least help to mitigate them. In that way it would become self-propelling and
the Natural Economy of Life would spread by word of mouth.”
“A big challenge!”
“We analysed the acute economic problems: the
municipalities had hardly any money. Necessary work remained undone or was done
by volunteers. There were even mayors who worked on a voluntary basis without
pay. A lot of people were unemployed through no fault of their own, in spite of
having skills they could have usefully contributed. Firms and the self-employed
didn’t have enough orders although they provided good services. There was a
need for their services but people didn’t have enough money.”
“So you printed new money?”
“No, of course we couldn’t print any money,
Pia. Only the central banks were allowed to do that. But systems of discounts
and bonuses were widespread. So we created a discount system, which we called
the »gradido«.”
“And how did it work?”
“Every member of the network was credited with
100 gradidos a month on their gradido account: »gradidos for being with us!«.
In this way people were able to thank a supplier who had given them a discount,
cut their selling prices, and so on.”
“When you got a discount of 50 euros did you
give the person who granted it 50 gradidos?”
“Generally, yes. Some people gave more, some
less as the equalisation in gradidos was voluntary at first. After all, the
gradido wasn’t a state-recognised means of payment at that time.
You also had the possibility to thank
neighbours for their help. Mr A mowed Ms B’s lawn and she gave him gradidos for
it. Mr A was able to thank the person who coached his son. Young and old
strengthened their social contacts and networks. They enjoyed helping and
thanking each other and a new feeling of togetherness emerged.”
“And how did it benefit the municipalities?”
“Municipalities and charitable institutions
were able to create more gradidos to thank citizens for their voluntary work.
Important services that were no longer affordable because of shortage of money
could be performed by volunteers, who then enjoyed many benefits.”
“So the municipalities were able to economise?”
“Yes, and when the government joined in, even
the state coffers were disencumbered.”
...and let it grow
“Did the penny drop with the politicians then?”
“Yes, it did. Soon there was a majority in
favour of the gradido and it was decided to phase it in as a parallel currency
alongside the euro. Sales in gradidos were tax-free like today. It started with
a minimum gradido share of 10%. We increased it 10% every year up to 50%. In
that way everyone could gradually get used to the Natural Economy of Life. If
problems had arisen we would have had enough time to take counter-measures.”
“That means that after five years every
supplier had to accept at least half of all payments in gradidos?”
“That’s right. In that way all prices in euros
had fallen by at least half and so had the labour and unit costs. The other
half was paid in gradidos. Some suppliers even accepted more gradidos so as to
do better business. Domestic products became more competitive. That’s why even
foreign suppliers began to accept gradidos.”
Restructuring of state
finances and securing of private assets
“And what about the state?”
“State expenditure in euros also fell by half.
The good thing was that the tax revenues did not decrease so fast as more was
sold because of the favourable euro prices. The increased added value enhanced
quality of life for all citizens. But that was by no means all. We had resolved
to pay back the state debts in a few years – in euros, of course!”
“Pay back the state debts in a few years?”
“Yes, really. It has to be mentioned here that
the world was once again in the throes of an economic crisis. The monetary
system was threatening to collapse at any moment as the exponential growth of
assets and debts couldn’t go on much longer. Whether a stock market crash, a
war or inflation – it was very likely that something would happen but nobody
knew when. People could have lost their assets at any moment. We looked for a
possibility to secure the citizens’ assets and repay the state debt at the same
time. We developed asset exchange (AE), a mutual commitment that served both
the government and the citizens.”
“So it was another win-win situation.”
“Yes, it was, Pia. The asset exchange planned
for a compulsory conversion of part of all euro assets into gradidos. The
percentage increased again every year in five phases. After five years 5% of
all assets had been changed into gradidos annually.”
“Didn’t rich people take their money abroad?”
“Then they wouldn’t have been able to benefit
from the securing of assets provided for by the asset exchange. In the case of
an economic crash the most recently declared assets were recorded and paid out
in gradidos over a period of 20 years. In this way all assets were secured for
at least 20 years.”
“Let’s assume I had a million euros at that
time. Then I would have had to change 50,000 euros into gradidos every year?”
“Exactly.”
“So my euro assets decreased as long as the
euro was stable?”
“It depends. Clever investors were able to
invest their money for more than 5%.”
“And if there was a monetary crash?”
“The value of the gradido stayed stable since
it was determined for that case: 20 gradidos is the price of an averagely
skilled hour of work.”
“Aha. My euro assets would have been gone, but
I would have got 50,000 gradidos annually for 20 years. – And who from?”
“From the Equalisation and Environment Fund.”
“If I had secretly taken my money abroad I
wouldn’t have got anything?”
“Correct. And as nobody knew when the crash
would happen, it was worth being honest. Besides that, most people had realised
that the gradido had the great advantage that you could do business with it
tax-free.”
It worked out!
“And Germany became free of debt?”
“Yes. The total assets of four trillion euros
resulted in an exchange of 200 billion euros annually. The entire state debts
were repaid in a few years.”
“What did the other countries say about it?”
“At first the world reacted with scepticism.
But as international trade went on, there were soon imitators, who also
introduced the gradido.”
“How was international trade able to go on?”
“Prices in international trade stayed the same.
Buyers from abroad could either pay the full amount in euros or part in
gradidos. In that way countries that had also introduced the gradido had a
competitive advantage over the others.”
“Then all countries must actually have
introduced the gradido.”
“They did it gradually. One day the big
financial crash came. But it didn’t really interest anybody anymore as they
were all very well provided for. In the end we had gradidos and the Natural
Economy of Life.”
– – – End – – –
