THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

Terra unit is expressed in terms of a representative basket of
commodities and services, it keeps P constant by definition. Fisher's
equa80n therefore shows that G, the total goods and services
exchanged, would necessarily increase with the introduction of a
GRC, thereby improving overall economic wall-being.
Last but rot least, the use of a GRC in complement with
conventional national currencies would automatically tend to
counteract me prevalent business cycle, thereby improving me
overall stability and predictability of the world's economic system.
This is so because there is always an excess of raw materials when the
business cycle is weakening (weakening of raw material picas is one
of the key indicators of a recession). Corporations would therefore
tend at this point of the business cycle to sell more raw materials for
storage to GRC Inc., which would pay for them with Terra. The Terra
would be used immediately by these corporations to pay their
suppliers, so as to avoid me demurrage charges. These suppliers in
turn would have a similar incentive to pass on the Terra as medium
of payment. The spread of this increased incentive to trade would
therefore automatically activate the economy at this point in the
cycle. On the contrary, when the business cycle is in a boom period,
corporations have a systematic incentive not only not to sell new
inventories to the Counter trade Alliance, but even to cash them in to
have access to the raw materials themselves. This would reduce the
amounts of Terra in circulation when the business cycle is at its
highest thereby cooling off the economy at this point. At the peak of
the cycle, it is even possible that no Terra remain in circulation at all
(which does not preclude their continued use as contractual reference
currency).
Both Keynes and Friedman have shown that with conventional
money, the velocity of money is pro-cyclical (each for different
masons: the former on me basis of changes in interest rates, the lathe
on the basis of the predominant role of Friedman's 'Permanent