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OpEdNews Op Eds    H2'ed 12/31/19

Stop The Global Financial Elite Perversion Of John Maynard Keynes

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In 1944, Keynes came to the Bretton Woods Conference to present his idea of the Bancor, a unit of account to be created by an International Authority to keep foreign exchange accounts always balanced so that trade could prosper among nations.

The co-convenor of the Conference, Harry Dexter White, had no ear for the Bancor. He was interested only in establishing the Dollar as the international reserve currency, a proposal that he was certain would be acceptable to the US Congress.

The idea of the Bancor has been kept in subdued conversation among economists. Until now. Currently, that idea appears to be the core of a proposal that is presumed to be implemented in a few days by the International Monetary Fund.

James Rickards, an insider consultant and financial writer, is warning that a "Global Financial Elite" has the support of the IMF to a plan to replace by December 31, 2019, the US currency with a new "Distributed Ledger System" using the IMF's "Special Drawing Rights" as a new "global reserve currency." This plan is a perversion of Keynes' thought about the Bancor.

The Bancor was supposed to be a unit of account, with no implicit exchange value.

How to Set Things Right

With three clarifications, the spirit of the Bancor may be revivified:

First, taking a leaf from experience rather than abstract theory, as it was finally incorporated into the IMF's "Special Drawing Rights" the Bancor would have exchange value, a value ultimately determined by international financial markets.

Second clarification is that the Bancor ought to be created by each national Central Bank, so that we would have the American Bancor, the Swiss Bancor, the Chinese Bancor, etc. Let us temporarily call it the xBancor. Today's computers' power will easily let us ascertain the value of each Bancor at each moment in time.

The third clarification is most important. Each national Bancor would have to be distributed in accordance with three rules developed within the context of Concordian monetary policy. The Bancor should be issued as a loan:

  1. only to create real wealth of tables and chairs, not to purchase financial instruments;
  2. to individual entrepreneurs, cooperatives, corporations with ESOPs and/or CSOPs in their constitutions, and public agencies with taxing power so that the loan can be repaid;
  3. at cost.

When Should the xBancor Be Created?

The xBancor should be created as soon as possible; as soon as a national - and international - discussion occurs to gain acceptance of this financial instrument. But not later than a few hours after the next financial crash occurs.

What Value Should Be Assigned to the xBancor?

Each xBancor should be created at par value with each existing national currency: thus, 1 US Bancor = $1.00; 1 Swiss Bancor = 1 Swiss Franc ; 1 Chinese Bancor = 1 renmimbi.

Yes, the value of each Bancor would be allowed to fluctuate as the value of today's currencies fluctuates.

Yes, we would then have a world currency - but it would be wholly controlled by each national government.

What Is the Role of the IMF or the World Bank in a Bancor Regimen?

The Role of the IMF or the World Bank in a Bancor regimen remains precisely as it is today. Indeed, if the IMF should feel the need to use its privilege to create Special Drawing Rights, it could continue to do so. It would appear that there would be no need to even change the name of its financial operations. The IMF would continue to create SDRs. There might not even be the need to call these financial instruments IMF Bancors or any other such denomination.

What Are the Benefits of Creating Bancors?

To penetrate the value of creating a Bancor regimen we have to determine the timing of its creation. The major distinction is creation before the next Stock Market crash or after the Stock Market crash.

Before the crash. If the Bancor regimen is created before the crash, there would be ample opportunity to fully explain and to plan ahead each and every detail of this regimen; ample opportunity to avoid potential pitfalls; ample opportunity to debate pros and cons.

After the crash. If the Bancor regimen is established soon after the crash, what will be avoided is the catastrophic collapse of the value of, likely, all national currencies - as well as the collapse of the value of all financial instruments.

Short-term Effects

Short-term effects can be rather easily determined. The opening of the national credit flow to satisfy the needs of the agricultural, commercial, and industrial world implies that, provided the Bancor regimen is established in a truly timely fashion, a collapse of the financial world will not affect the world of the real economy one iota.

Another Great Depression will be avoided. And this disaster will be avoided without shifting the burden on to exhausted taxpayers and/or unexpectant bank depositors. Or more simply, but perhaps more insidiously, without shifting the burden on the over-inflated accounts of Central Banks. Unless a Debt Jubilee is proclaimed in accordance with Moses' injunctions, the least damage that we are inflicting upon the real economy by overburdening the accounts of Central Banks is an opportunity cost. We have no appetite; we have no resources for maintaining our public infrastructure in order. The United States of America is fast plunging the maintenance of its public infrastructure to a level that used to be the shame of developing countries.

The collapse of the financial world will, of course, have some major implications for both the workers within that world and the stockholders and bondholders depending on that world. These are people who might see the value of their portfolios reduced even to zero. Provided their portfolio is diversified, financial ruination will not totally engulf them.

People who will lose their jobs will have the opportunity to make one of at least three choices:

  • They might choose to retire prematurely;
  • they might start the business operation of their dreams; or
  • they might find employment with local banks that are expected to prosper under a Bancor regimen.

Long-term Effects

Long-term effects of a Bancor regimen are much more difficult to pinpoint. Given that the creation of Bancors is determined in accordance with firm needs of the people requesting Bancor-denominated loans, the overall economy is set on a steady course.

Given that the distribution of Bancors is determined in accordance with the value people contribute for the creation of wealth, the overall economy is set on a just course.

Being set on a steady and just base, the overall economy is set on a lasting course.


The overall assessment of creating and distributing Bancors following rules determined within the context of Concordian monetary policy is this: We shall pass from a world in which money controls people to a world in which people control money. Let a Concordian Bancor regimen come: The sooner the better. Let the collapse of the modern financial world come: The sooner the better.

We are tired of waiting for a just and steady world of economic affairs.

A different version of this article was published 30 December at Econintersect.

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Carmine Gorga, Ph.D. Social Media Pages: Facebook Page       Twitter Page       Linked In Page       Instagram page url on login Profile not filled in

President, The Somist Institute, 87 Middle Street
Gloucester, MA USA 01930

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