18.1 Need for new institutions and macroeconomic tools

In order to be able to smoothly transfer increased productivity gains onto employees to maintain their buying power and consequently the stability of economy as a whole  or to decrease unemployment through increasing free time we need something which at the moment we don´t have:

-          Institutions, capable of implementing these tasks at the request of government ( or independently)

-          New financial framework, enabling direct taxation of  idle capital through negative retail interest rate


As Central bank is capable of stimulating supply through monetary easing, we need its equivalent capable of stimulating demand.

It is not enough to say the government can provide the fiscal stimulus. It is easier said than done.
The way fiscal stimulus is considered today ( often as infrastructure spending, as if it was the only option) in many cases represents  wasting of money by doing what is not needed at all.  ( paving of parks, as an extreme example, from Eurofonds..)

Without established tools and methodology, organization and access to resources, such task is not going to be realized.

We need an overreaching agreement in society  that productivity is rising and we need to address the issue in an organized way by spreading these gains through all the people.


In the past, when similar socio-economic contradiction occurred, they had been solved by wars, peasant uprisings, revolutions.  At the end, the productivity WAS passed onto the people, or civilization was diminished to lower level through destruction.

But as we are living in 21st century, we should already recognize that these contradictions are occurring and will be occurring again, always when there is a significant increase in productivity.

Therefor, we should be able to respond immediately, without millions of unemployed and general mess, accompanied by politicians bickering what to do.

We need formal institution, capable of following tasks:

-          Providing subsidies to certain industries, based on fair approach to all in that industry, based on  knowledge that  primary productivity of these industries are naturally lower and therefor need help to avoid outsourcing and from it stemming unemployment.

-          Providing subsidies to companies for employing more people with more time off, at full salaries.

-          Verifying claims of companies for such subsidies and applying penalties for breaking of rules.

The same way as we have Social security organization, we need
Productivity equalizing and offsetting organization, based on laws and available policies.


Example:  there has been increase in productivity due to computerization. As a result there is increased unemployment, dragging the whole economy to depression because of diminished demand.

Productivity equalizing organization with Government will set up a program of additional 2 weeks off for  all employees, providing finances to participating companies  ( can be from particular sector, or geography) and oversee its implementation.

As a result, the aggregate demand picks up and unemployment decreases.


To be able to finance such programs we also need:  New financial framework, based on:

-          Fully digital financial system

-          Closed circulation of money within defined finance blocks ( or just state)

-          Laws allowing for imposing negative RETAIL interest rates on deposits.


Without fully digital system, we are not able to tax those who are just hoarding money without any purpose.
If capital is able to escape defined boundaries, we are not able to tax it. If we imposed retail negative interest rates  without these 2 conditions, the money would be withdrawn from banks or transferred abroad and financial system would collapse.

But we need to be able to tax capital.
So we need enhancement to current model:  we need to go 100% digital.

Without fully digital system enabling us to directly tax savings, the only alternative is to print more and more new money, which ultimately ends in inflation but its ability to meet the goal of increasing the employment is at best limited.

The mathematics knows the negative numbers and they have their use in economics as well.

We can decrease economic activity through increasing retail interest rates , so we must be able also to increase it by going to the negative side of interest rate scale. But to do that we absolutely need to prevent people from escaping such taxation tools by withdrawing money from banks. Therefor the fully digital financial system is the only answer.

After implementation,we will be able to manage the economy without any restrictions and recessions and unemployment will be history.