Credit Money
In our current economic system, the power to create money through credit remains centralized in governments and financial institutions. This arrangement has led to cyclical instabilities, with Keynesian policies of government spending competing against Friedman's monetarist approach of controlling the money supply. Both systems ultimately fail to address the fundamental disconnect between citizens' needs and economic policy. The shift from gold standards to credit money, followed by the addition of cryptocurrencies, demonstrates hesitance in decision-making. The current rules are based on pure data, lacking proper labeling. The US Constitution, Article I, Section 10, restricts the right of coining money or emitting bills of credit to the federal government. The Basel standards ensure that any new projects receive the approval of existing money owners by limiting the amount that can be raised based on overnight central bank rates in both the EU and the US, affecting a fraction of debtors. Keynesian policies only allow the government to spread money through grants initially, which can then be used in free exchange later. What if we distributed the right to raise credit directly to citizens, similar to how we distribute voting rights in a democracy?
The Constitution guarantees the right to vote and bear firearms. It does not provide money. You have to cast it yourself. You can borrow from thy neighbour. George Washington was a slaveholder. His original version of the Constitution did not grant voting rights to women either.
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The history of economic policy shows a persistent struggle between competing approaches. Keynesian economics advocates for government spending during downturns, producing achievements like the Hoover Dam and New Deal programs. Monetarists like Milton Friedman, on the other hand, emphasize fiscal discipline and maintaining the original purpose of money as deferred consumption. Neither approach fully empowers citizens to direct economic activity according to their actual needs and values, leading to inefficiencies that manifest as unemployment, inflation, and growing discontent.
A system of universal credit rights in 100 years would fundamentally transform this dynamic. Imagine every citizen having the constitutional right to raise a standardized amount of debt each month, which they could use for personal consumption or investment in businesses and projects. This would allow individuals to fine-tune consumption precisely, making decisions that naturally avoid inflation while meeting their needs. With this power distributed among millions of citizens rather than concentrated in central authorities and corporate boardrooms, the "wisdom of crowds" would create more stable economic outcomes than either top-down Keynesian intervention or oligopolistic monetarist discipline.
This approach would render unemployment benefits obsolete while making financial defaults nearly impossible. Citizens could always raise sufficient debt to cover their basic needs while having the freedom to assign their credit rights to employers or ventures they believe in or deem more efficient. This creates a natural balancing mechanism where people would direct their credit allowance toward employers that demonstrate growth potential, effectively voting with both their labor and their debt capacity. The worst-case scenario becomes self-sufficiency. Citizens producing their own necessities while lending their credit to others building future products they'll eventually need.
Government budget deficits would naturally diminish under this model. During economic downturns, rather than requiring massive government intervention, citizens could deploy their credit rights directly - either joining promising employers and lending them their credit allowance or founding new businesses using their personal credit. This distributed approach would create a more responsive and resilient economy than centralized fiscal policy could ever achieve. Citizens would essentially possess economic voting rights alongside their political ones, making the financial system more democratic and trustworthy.
The implementation of such a system requires rethinking the government's role in healthcare and retirement, traditionally funded through central debt issuance. However, a credit-rights approach isn't utopian. It builds on behaviors many citizens already exhibit through work and investment decisions. By democratizing credit creation, we would eliminate economic extremes and create more stable price mechanisms. When citizens can both vote politically and raise credit economically, they make better collective decisions, statistically smoothing out market spikes and downturns. Most importantly, they gain the freedom to invest in products and services that deliver genuine value, rather than those selected by governments or financial elites. Just as universal suffrage transformed politics, universal credit rights would transform our economy into a truly democratic system in 100 years.
This article was revised on April 3, 2025.