Bringing Clarity to the Murky Area in My Otherwise Brilliant Economic Paradigm

Stephen Yearwood
8 min readDec 30, 2022

the part about needing for money to be returned to the central bank

Photo by Wesley Tingey on Unsplash

Some years ago I stumbled upon a way to transform the outcomes for the nation of the existing economic system. The basic idea is to create money as needed to fund a (sufficient) minimum guaranteed income for (adult) citizens and to fund all government (from local to central) from now on at the current per capita rate of total government spending. It can be thought of as a kind of permanent ‘quantitative easing’ — but with built-in safeguards against inflation. The result: the economy would be stably self-regulating with no unemployment or poverty for any adult citizen and no taxes/public debt. Also, sustainability would be systemically increased. All of that would be accomplished without imposing any cost on employers, without having to redistribute anything, without imposing any limit on income/wealth, and without requiring people to act any particular way. Moreover, none of that would preclude using the political process to seek any other goals anyone might desire for the nation to achieve (in a nation with a democratic political process, at least)*.

How could anyone say that a proposal that would accomplish all that in that way is anything but brilliant? Please believe me when I say with all sincerity that I am as astonished as anyone could be that I happened to come up with it. added 12/31/2022: As I have written elsewhere, to solve a problem doesn’t require being the most intelligent person or even the most knowledgeable. I am neither of those. It does require being knowledgeable enough and smart enough. I am both of those.

I have not been in any way unclear about what those outcomes would be or how this proposal would generate them. The paradigm does require, however, that some money would have to be returned to the originator of the money used for those purposes. [Let’s say, for present purposes, that would be the central bank — though, alternatively, it could be a monetary entity created to administer this paradigm.] That does create issues for “without imposing any limit on income/wealth.”

My standard way of expressing the part about needing to have money returned to the central bank has been something like, “People and businesses could retain plentiful pools of money and, unlike a tax, no money would be collected from any person or business before it could be used for purchases/investment.” Clarifying how that would work without imposing any limit on income/wealth does not mean retracting any of it.

The problem with imposing limits is arbitrariness. Arbitrariness in human relations of any kind, including all matters related to the governance of society, was correctly equated with injustice by the English philosopher John Locke way back in the late 1600’s. To impose any limit on how much wealth a person could accumulate would be unjust for the very reason that it would inevitably be arbitrary.

We cannot totally escape arbitrariness in human relations, including matters of governance, but we should surely avoid them as much as possible. Taxes are perhaps the most glaring example of arbitrariness in governance in a nation with a democratic political process — an injustice this paradigm can remedy.

Another example of arbitrariness in governance is having the economy ‘managed’ by the central government/central bank economic Leviathan. Even allowing that the deciders in those entities always have the best interests of the nation as a whole in mind, the decisions they make will always generate better outcomes for some and worse outcomes for others. Moreover, defining “the best interests of the nation as a whole” is inevitably arbitrary because it inevitably involves value judgements, which inevitably involve beliefs, and all beliefs of all people are intrinsically arbitrary from the point of view of any other person. Making the economy self-regulating would remove a whole other layer of arbitrariness — injustice — from the governance the nation.

In this paradigm neither the amount of money flowing into the economy nor the amount of money returned to the central bank could be determined by any person, committee, or organization. It would be completely self-regulating. That would in turn make the economy as a whole self-regulating. Randomness would remain, but that does not equate with injustice. In other words, with this paradigm in place even the economy of the U.S. would be more market-based than it is at present — yet more just and with better material outcomes for the nation.

Back to the immediate problem, wealth can take two forms: ‘liquid capital’ (money) and ‘fixed assets’, such as stocks, bonds, real estate, and (relatively) rare objects (to include, of late, those of a virtual kind). Acquiring any kind of asset is a form of investment.

Limiting the accumulation of money itself is easy and straightforward: limiting how much money can be hoarded (retained), based on income, such that the higher the income, the more money that could be retained, but with some limit imposed. As long as any ‘excess’ money beyond that allowed limit could be converted to fixed assets for storing value, having such a limit would not have any affect on the accumulation of wealth. The inevitable arbitrariness involved in having a limit on hoarding money would be overcome by allowing the limit to be transcended by converting money to assets.

To stave off arbitrariness altogether there could not be any limit imposed on how much wealth could be accumulated in the form of assets. Limiting the accumulation of money in the economy by having money returned to the central bank without imposing a limit on the amount of wealth individuals could acquire has been, for me, working alone on the problem, quite a challenge. (Plenty of people have offered criticisms — ranging from specious to spurious to pointless to even blatantly, obviously erroneous, but no one has ever offered a positive suggestion for improving the paradigm.) Finally resolving with absolute clarity that part of the problem resolves any question regarding the validity of this economic pathway to a better nation.

It does require separating the interests of human beings from those of businesses. Please allow me to address all concerns.

For people there would be no limit on investing. Any and all ‘excess’ money above the allowed limit (whatever that might be) could be converted to any (legal) asset of any kind. The only limit people would face is that selling assets would be limited to other individuals; to be clear, assets could still be purchased from any entity.

If assets could pass back and forth between individuals and businesses the effect could be to have an insufficient amount of money returned to the central bank. Instead, the money used in those purchases — in ever higher amounts — would be passed back and forth via those sales/purchases like a game of ‘keep-away’. Unfortunately, we do have to safeguard the system against the stupidest possible acts of human beings, some of whom would act so as to endanger the system even though this paradigm would make the economy far more just than any economy in the history of civilization has ever been in addition to the tremendous material outcomes cited at the start of this article. (I cannot emphasize those points too much.)

Businesses would be allowed unlimited investment in the company: human capital, plant, and equipment. Investment in the form of purchases of any other kind of asset, such as stocks or the bonds of other corporations, would be limited to, say, some multiple of the amount of money it could allowably have on hand. Only any excess money beyond all that would be returned to the central bank.

First of all, for purposes of this paradigm “a business” would be defined by having employees and selling the good(s)/services(s) it produced to generate revenue. There would be other ways for people to generate income via sales of goods/services, which would be counted as personal income. Artists, inventors (both possibly receiving royalties) and artisans come to mind, but any good or service produced by an individual working alone or in a true partnership would be such a way of making money.

Regarding any business, only profits could possibly be subject to being returned to the central bank. Profits are revenue minus costs. Costs include the total remuneration of all employees, to include owners who work in their businesses and CEO’s. “Total remuneration” includes wages/salaries and benefits: a business’s ‘investment’ in the human capital employed in it. Note that nothing has been said about limiting wages/salaries or benefits. Other costs include (but are not limited to) paying for plant and equipment — either directly or making payments on the debt used to acquire them. So there would be no way this paradigm would crimp any business’s capacity to invest in its own capacity to produce.

Furthermore, businesses would be allowed to retain “plentiful pools of money” — liquid capital — in the form of retained profits. What might be the limit on that is open for discussion. It is almost irrelevant what the limit might be, so long as there were one. The limit might be, for example, the annualized amount of the profits garnered in the most profitable quarter in the history of the business. Also, it would be free to purchase other assets in some multiple of that amount of money.

Finally, having money collected to be returned to the central bank would not in any way affect a business’s revenue for the following quarter, or any quarter after that. The full revenue of the business would still be there — or at least would not be diminished because of a limit on hoarding money.

In short, there is no way such a limit on hoarding money in the form of profits could be said to be ‘anti-business’. It could not possibly do any harm to a business’s ability to produce its good(s)/service(s) or grow or improve — or increase the remuneration of any of the people employed in it.

On that subject, as I have noted previously when discussing this paradigm, it is the case that remuneration could not take the form of bonuses of any kind. This paradigm does not require limiting in amount the wages/salaries or benefits of any employees, but bonuses would be a way to circumvent the limit on the accumulation of money in the economy that is necessary for the successful functioning of this paradigm — with all of the benefits for the nation it would entail.

So, this paradigm offers a future of greater justice and more material well-being. There is no flaw in it, no area of doubt left. The increase in justice is obvious; the increases in material well-being it would bring are irrefutable: they are built into the structure of the paradigm.


Anyone wanting to learn more about the details of the paradigm could start by clicking on the link in the first paragraph, which has links to more articles.

*For people who believe that justice requires more equality in incomes, check this out. Nothing written in that paragraph would have to be retracted in going there.



Stephen Yearwood

unaffiliated, non-ideological, unpaid: M.A. in political economy (where philosophy and economics intersect) with a focus in money/distributive justice