Eanfar’s Law of Money-Value Creation
All Human Communities Must Inject Money Into Their Economies. In the fiat world, central banks create money out of thin air, then they inject that money into highly concentrated commercial banks, which then distribute that money to the rest of the population using the highly inflationary fractional reserve banking system. That’s one way of injecting money into an economy, but it’s not the most equitable, stable, or sustainable way to do it. When we have a liberated Gini ecosystem that doesn’t depend on banks, we can bypass the banks and distribute the money directly to the citizens as long as we respect the Law of Money-Value Creation.
The Law of Money-Value Creation. In short, the “Law of Money-Value Creation” is a principle that I’ve developed over the years to help people understand the relationship between value creation and units of currency in a money supply. Formally, the law states:
Monetary inflation is the result of orphaned currency units in a money supply. To avoid inflation, each unit of currency must be linked to a unit of value in the real economy.
In other words, money cannot be sustainably created out of thin air like politicians do today; rather, it must be created and linked with actual value that has been created in the real human economy. Specifically, money and value must be created and linked together (not necessarily at the same time); otherwise, orphaned currency units are created, which merely increases the money supply and creates monetary inflation without a corresponding increase in value within the real human economy.
The image below illustrates the Law of Money-Value Creation, which is at the heart of Gini’s monetary policy.
This topic is explained in more detail in our Gini book.
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