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A new Economic System  

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​​ Economic ideas are always and intimately a product of their own time and place, they cannot be seen apart from the world they interpret. And that world changes – is, indeed, in a constant process of transformation – so economic ideas, if they are to retain their relevance, must also change”. A History of Economics:  The Past as the Present, P.1. John Kenneth Galbraith.

A New Role for Central Banks and The New Economics of Global Monetary Velocity

The new economics of Perfect Market Equilibrium, as ‘intimately a product of’ its ‘own time and place’, (A History of Economics: The Past as the Present, P.1. John Kenneth Galbraith), is consequently better able to ‘interpret’ the new globalised world around it, over pre-internet theories of the insular economies of yesteryear, be they Keynesian or conventional Monetarist. Evidencing the extent of globalisation and the need for a new economics better able to interpret the new globalised landscape, growth of the daily Forex Market turnover from US$ 1.7 trillion in 1978 to its current vastness of circa US$ 7.5 trillion in 2022, with a 60% increase in the last decade alone.

A New Role For Central Banks: Central Banks have previously entertained the new role for themselves as all consolidating ‘Super-correspondents’, p.29, Bank of England ‘Cross Border Inter-Bank Payments and Settlement’, but unviable and impractical under their antiquated methodological wholesale approach, where the ever present issue of settlement risk is passed on to them in a magnified and concentrated capacity.

Perfect Market Equilibrium and the new Perfect Netting of cross border payments changes everything to now allow global monetary flows to be indeed routed though Central Banks on an all consolidated and streamlined basis, not as ‘Correspondents’, but as sovereign currency ‘Gateways’.

Under this new architecture, Central Banks are not ‘settlement agents’, but simply ‘perfectly netted clearing account conduits', to confer upon them, control, regulatory oversight and the benefits of global currency payments flowing through their accounts. And this, under a new fully streamlined, consolidated and vastly more efficient construct, which absolves them of all conventional risk and associated client side payments minutia associated with SWIFT.

The New Economics of Global Monetary Velocity: With global monetary flows now transiting through this new inter-Central Bank architecture, the requisite monetary link is created between Central Banks for them to now control and regulate, as a collective, the velocity at which money circulates within the global economy.

The new economics of Global Monetary Velocity, is thus a new form of monetarism facilitated by the new Central Bank cross-border payments architecture and which is applied by Central Banks.

The radical new implications of this new vastly more efficient, simplified and settlement free construct, is that it invests Central Banks with new economic policy levers. 

That the new electronic P2P Netting system, built into the new Fintech P2P Exchange mechanism, consequently instantly and perfectly nets cross border payments between domestic payment systems at real-time exchange rate factored values and on a new consolidated sovereign currency basis, allows the value of a remitting payment of one party to be redirected and re-allocated as a beneficiary payment to another party, within its own domestic payment system.

This firstly means global cross border payments can now effectively move as fast as domestic payment systems allow, effectively instant and secondly, as with conventional domestic banking payment system technologies, where payment value timeframes and dates can be pre-determined, so the new system allows re-allocated beneficiary payment timeframes to be pre-determined and adjusted at will.

This consequently provides for a new ability to regulate the velocity at which money circulates within the global economy, to increase or decrease the amount of money within it at any one time. As a new globalised monetarism of its ‘own time and place’, it is better able to ‘interpret’ and consequently accommodate the modern 21st Century globalised landscape.

Under this new monetarism, the velocity at which money circulates  between economies can be further fine tuned and calibrated on a bilateral currency pairing or multi-lateral currency basis, and further by specific currency segment; personal or business, traded or cross-border payments, from which a new inter-Central Bank macro-economic policy can be co-ordinated on a global, regional, bilateral country and currency segment basis.

With global cross-border payment timeframes able to be adjusted and calibrated on a new instant, delayed minute, hourly or in extremis daily basis, all according to the newly facilitated inter-Central Bank monetarist policy relationship at a macroeconomic level, these new economic levers can be applied, whilst comfortably operating within the existing cross border timeframe performance capabilities of the disparate risk based and inefficient international inter-bank correspondent model.

The new global economics of this new monetarism, are thus not based on interest rates or the control of money supply, and neither directed towards financial institutions, the efficiency of which some economists, notably JK Galbraith questions, but on the mechanics of a new global monetary system, which can be electronically accelerated or decelerated on a new finely calibrated basis.

A new source of public Monies

Taxation and the Bond market, as the existing means by which society raises public monies for its upkeep, respectively dating back to antiquity and the inception of the Bond Market in 1694, are fully pre-globalisation, pre-Forex market expansion and pre-Perfect Market Equilibrium methodologies and systems. 

Economic systems, as a product of their times, have forever evolved, yet it might be advanced, failure of the existing economic system to evolve in line with globalisation, has placed society at odds with a dated one unable to meet its current needs. And this notably reflected in the fault lines of increasing systemic risk, ever more difficult to contain, extreme domestic and global wealth disparities and severe pressures on existing means by which public monies are raised, with debt to GDP ratios and taxation policies pushed to the limit and precariously balanced.

In this regard, the first structural global economic effect the new global cross border P2P Perfect Netting system induces, through its elimination of interbank ‘vostro nostro account settlement and SWIFT, is to release trapped ‘Vostro Nostro’ account balance liquidity into the global economy. According to a 2015 McKinsey report, this would equate to a value of US $27 trillion, as a first release of wealth held by financial institutions to the real global economy.

The second structural effect, and this with respect to the re-routing of global cross border payments through Central Banks on a new risk free basis, is to place within their hands, the estimated global value, per the Bank of England, of $150 trillion in 2017, and rising to over $250 trillion by 2027.

That the velocity at which global cross border payments, in the form of global money circulation, can now be electronically controlled and adjusted on a finely calibrated basis, to increase or decrease monies within it at any given time, also provides for the extraction of a calibrated proportion of this money, as new public monies as it transits through Central Bank accounts.

Depending on the Global Monetary Velocity opted for, determines the amount of money within the global economy and also the amount able to be extracted by Central Banks as new monies.

A faster velocity to place more money into the real economy, but less money held in Central Bank clearing accounts, and conversely, a slower velocity lessening real economy money, but increasing the value held by Central Banks.

This provides Central Bank policymakers with a new mix of levers and options they can apply, with respect to prevailing global economic conditions. Radically however, it provides them with access to new monies from a segment of the global monetary system, which is vastly larger than the Bond market.

The accepted conventions of Taxation and the Bond market are that there is always an offset or compromise. The greater the taxes levied, the greater the burden to society, and the greater amount of sovereign bonds issued, the greater society’s repayment cost. 

The limitations of these conventions, it might be argued, are the result of dated system capabilities of a bygone age. However, under this new technologically enhanced 21st Century methodology, there is no offset or imposed burden to society, in that it simply taps into a new vast and ever expanding pool of money, Central Banks now have control of. 

As a new economic system which meets with and is in concert with the new landscape of an integrated globalised economy, to address the shortcomings of pre-internet, pre-globalisation theories and systems, it is also a virtuous circle, in that the more the global economy expands, the greater the amount of new monies availed to society for its upkeep.

And this hopefully to spearhead a new age of ethical global prosperity and equality, where a fast tracked transition to renewables can also be funded by public monies.

This is what the higher state of Perfect Market Equilibrium and transition to the new more efficient and equitable market structure of dis-intermediated P2P affords.

Changing the Ethos and Moral Compass of Markets

The ability to operate at Perfect Market Equilibrium, transitions core market valuation from a traded risk / reward construct to a new ‘neutral’ globally harnessed data driven one.

Dis-intermediation of the financial institution and elimination of risk in global market valuation, fundamentally changes the imperatives and driving forces at the heart of the free market system. Since the market’s core of valuation and operational efficiency are no longer governed or bound by the naked pursuit of profit, the ethos and moral compass of markets can be set on a more tempered, yet efficient course, which works in concert with society’s aspirations of a fairer and more egalitarian distribution of wealth.

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