Inside money/outside money

It is important to recognize the current hierarchy of the money system. The first layer is a horizontal circuit of the private or inside money system: the expansion and contraction of balance sheet leverage, the circuit that obtains between correspondent bankers, or in our case, Economic agents. The second one is the fiscal circuit of the state or outside money system: the ex nihilo creation of nominal money pegged to the unit of account in which disputed contracts are enforced; and, optionally, the unit in which taxes are received. The design problem for ECSA is: how do we extricate ourselves from the second circuit and replicate its functions within the first circuit, in such a way that both stability and justice are endogenously produced. The secondary problem is to explain how the monetary system hooks into the real metabolic activity of the economy. Thanks to Colin Drumm for making this challenge explicit.

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