Money generation - Where does the money come from?

In my new vision of the economy, currency is not generated by a central bank, but rather by the work of the labour force. In doing so, the available money that people have to spend should be more in line with the needs of society than if currency is simply generated by a central bank and loaned to the populace.

It should also be more evenly distributed, as it is being created into existence by the masses, and not a select few who will end up collecting far more than their fair share of the existing money supply. After one year of currency generation, the policy for currency creation is assessed by a body comprised of government and citizens in the labour force.

If it is determined that the amount of currency in the system is sufficient for the needs of the economy's population, currency generation via work will either cease for the next year, or be reduced by a certain percentage, to keep in line with population projections. The goal is to have an appropriate amount of currency available in the economy so that the entire population will have enough money to sustain their lives, without massive devaluation of the currency available.
A sustainable economy, in line with the availability of resources on the planet, is the end goal of this model – it is not to continuously grow, which is why, when a certain amount of currency is made into existence, creation of currency will cease unless it is decided that the total available currency needs to once again grow to meet the population's needs.

The Republic of Star Island would aim to keep its population stable. When the rest of the world eventually decides that this method of money creation is suitable, and that maintaining a stable population is more important than continuous growth, I hope that they will follow suit.

Just as the human population cannot grow forever, neither can the economy. At a certain point, the world's economy has to maintain, not to grow. Growing beyond our bounds will only hurt the biosphere, which will in turn hurt us, because we get our wealth from the biosphere. We need it, and it needs us to respect its boundaries.

CURRENCY VALUATION

Initially, the plan is for the Star Island Credit to be pegged to the value of the Canadian dollar at a 1:1 ratio, in order to make trading between the two entities easy to do. I would like to see pegging of currencies to others made a more standard practice globally, so that over time, currency unions such as the Eurozone can be encouraged to grow for the purposes of easing trade. However, countries should retain the right to revert to their own currency, so that, should it become economically nonviable to remain in a currency union, they can leave their union.

PHYSICAL CURRENCY

Physical currency (bills and coins) are not planned to be issued internally in Star Island - however, traveler's cheques, which could be converted to foreign currency and then back into Star Island Credits, would be issuable via the government.

The reason behind not issuing physical currency is ecological and economic in mind. Canada got rid of the penny because it was costing more to produce than the value of the penny was worth. Similarly, Star Island would not want to get into a situation where whatever material and process it was using to make physical currency proved economically nonviable. Trees would not need to be chopped down and turned into paper, nor would cotton need to be woven into bills, nor would metals need to be mined to produce coins, all of which become covered in bacteria and other debris from repeated handling by people as they are used. This reduction in resource use is a cornerstone of Star Island's ecologically minded outlook.

One perceived advantage to this approach is that nobody in Star Island needs to carry a wallet full of cash. The disadvantage, of course, is that technology can fail at any time, potentially leading to an inability to pay for things. In such cases, however, multiple systems can ensure that people still have access to their money.

(i.e. If people are shopping for food, and suddenly a power outage occurs, customers will still be able to leave with their food, because backup systems will be in place to account for what food has been taken out of the store during any outages in power, and who took what.)

Ideally, personal shopping carts would be directly linked to one's own personal bank at home, so to keep a record of items purchased on such and such a date. As well, both someone's personal shopping cart and home bank could have battery backups that would kick on in case of power failure in the island. All sorts of levels of backup would be in place to ensure that an entirely digital currency would not vanish due to unexpected occurrences, such as power outages, natural disasters, or something as simple as a fridge magnet going in the wrong place.